Kuala Lumpur: The Malaysian Investors Association (MIA) said Tuesday that the Second Board will not add much value to the whole market if it is merged by year-end with the Main Board as proposed by the authorities."On the surface, it (the proposed merger) may look good. However, the Second Board will have limited impact on the exchange's revamp," its president, Datuk Dr P.H.S. Lim said in a statement here.
He said in terms of percentage, the Second Board only contributes 1.47 percent to the whole board's market capitalisation.
"Total market capitalisation of the Second Board as at April 2, 2008 came to only RM13.858 billion.
"The second board in comparison with Sime Darby Bhd - the biggest listed company in the KLSE - is only 25.9 percent of Sime's market capitalisation at RM53.484 billion," he explained. Market capitalisation of the Main Board, meanwhile, was at RM920.195 billion as at April 2.
Lim said due to the uncertainty in the global economic outlook, investors today are more cautious in their investment approach and many regard the Second Board counters as poor investment quality, small and financially weak.
"The Second Board had lost its shine, especially after the Asian financial crisis in 1998. Many of its counters are in fact penny stocks, with 195 counters out of the total 226 counters under par value.
"Hence, the Second Board does not add much value to the whole market when the two Boards are combined. It may not bring excitement, especially to the fund managers who look for market liquidity and investment quality," said Lim.
He pointed out that some of the companies in the Second Board had been delisted due to poor financial health and legal suits.
He noted that on March 25 this year, 94 counters out of the 226 counters were not traded. - Bernama
