Bursa Malaysia Asks Listed Companies To Sell More Shares

On Business Times: Bursa to push firms to sell more shares

• BURSA Malaysia Bhd, operator of the nation’s exchange, said it will press publicly traded companies to sell more shares to stay in a revamped benchmark stock index, a move aimed at making the equities easier to buy and sell.
  
  “One of the biggest complaints by investors is you have very good companies, but they find it difficult to buy the shares,” Datuk Yusli Yusoff, Bursa’s chief executive officer, said in an interview in Kuala Lumpur yesterday. It will “bring a sense of competition; a lot of companies would want to be in that benchmark,” he said.
  
  The bourse is replacing the Kuala Lumpur Composite Index of 102 companies with the new 30-share FTSE Bursa Malaysia KLC on July 6. Companies in the new index will be required to have at least 15 per cent of their shares publicly available for trading, a level that will increase every six months.
  
  The government said yesterday it plans to sell more of its holdings in some of the nation’s biggest companies to help lure more foreign investment to Malaysia after the benchmark index’s 23 per cent climb this year lagged behind returns of other Southeast Asian stock markets.
  
  At least five of the nation’s 10 biggest publicly traded companies by sales, including Tenega Nasional Bhd and Petronas Dagangan Bhd, are partly owned by the government’s investment company, data compiled by Bloomberg show. -- Bloomberg

I do not quite agree.

I do think that from a business perspective, as a listed entity, Bursa Malaysia is biased towards more liquidity. More liquidity means more transactions and more transactions means more business.

Well is the lack of liquidity the main reason why investors chose not to invest in our stocks?

Would having more liquidity increase the attractiveness of our shares?

And what about the current shareholders in these companies?

If I have shares in say a stock named 'Banyak Shares Bhd' and if the company does a placement of 20% just to increase the liquidity, how would I feel? Won't this stock sale dilute my earnings per share by 20%? Would I be over the moon?

So stock sale or placement dilutes the earnings for the minorities. What about rights issue? The minority would then be given a chance to participate in such an exercise. Well, some might not like it because given the current economic conditions worldwide, not all minority shareholders will have the excess money to buy more shares!!! So would the minority shareholder be over the moon?