More research coverage of mid-cap stocks soon

KUALA LUMPUR: The local market will see more research coverage of medium-cap public listed companies with the launch of an independent research scheme by the Securities Commission Malaysia (SC) in the second quarter of the year.

The scheme, which will be rolled out in phases, is aimed at promoting retail investors’ participation in the stock market, said SC chairman Tan Sri Ranjit Ajit Singh.

During the tabling of Budget 2017, Prime Minister Datuk Seri Najib Abdul Razak announced the setting up of a special fund of up to RM3 billion to invest in potential small and medium-cap companies, besides conducting research on 300 companies.

It was also reported that a Capital Market Research Institute will be established, with an initial funding of RM75 million through the Capital Market Development Fund under Bursa Malaysia.

Ranjit highlighted that there are many good mid-cap stocks that are not covered by research houses and he is hoping that the scheme will help disseminate research reports to the investors.

He said the SC is in discussions with parties like Bursa Malaysia, investment banks, stockbroking association and investment funds to firm up the plan.

“We’re working with every one to have independent research provided for these companies. We will create a funding mechanism for research companies to take on the research.

“The idea would be to identify different pool of research houses to participate in this scheme and every company will be covered by two research houses. There will be at least several research reports produced for every company every year.

However, he declined to reveal the number of mid-cap stocks which will be covered by research houses.

Ranjit said the SC is also discussing with investment funds for them to allocate a certain portion of money to be invested into these companies.