KUALA LUMPUR: The regionalisation of the 10 ASEAN capital markets have become even more important now in the wake of recent global events such as the United Kingdom’s surprise decision to exit the European Union as well as the United States’ increasingly populist stance.
In delivering his keynote address at the ASEAN Fixed Income Conference 2017 earlier today, Securities Commission Malaysia chairman, Tan Sri Ranjit Ajit Singh said that this is the best time for ASEAN countries to further strengthen its capital market ties to withstand all these ongoing external volatilities.
“The economic growth engine of the Asean Economic Community (AEC) needs to be fuelled by financing. The capital market will continue to be a critical source of capital as market based financing will be essential in filling the many funding gaps in our economies,” explained Ranjit.
“The benefits of being able to tap this savings pool cannot be overstated, but the same time, we must look beyond our own savings pool and being able to present ASEAN as an asset class to global investors will enable ASEAN to access new sources of funding.”
The regionalisation of ASEAN’s capital markets is therefore, the most logical and ideal solution.
“The regionalisation of ASEAN’s capital markets will create global competitiveness by providing the liquidity, scale and capacity to compete globally,” he said.
“Expanding the space which can be accessed by individual ASEAN capital markets will also facilitate diversification and reduce domestic volatility resulting from global shocks.”
The benefits of this regionalisation will be two-fold said Ranjit.
The first would be on the strengthening of the financial intermediation, capacity and risk management to support national and regional growth. The second would be the consolidation of ASEAN as a group to reduce vulnerabilities to external shocks and market volatility.
The main sources of finance in the AEC are the capital markets and the banking sector.
As of the end of 2013, according to data provided by the SC, the combined capital markets of ASEAN nations stand over US$3 trillion, while its saving rates amounted to nearly US$800 billion as of the end of 2015.