Malaysia urges stock market shake-up

Malaysia's regulator insists it has teeth

Ninety-nine Malaysian firms have been told to sort out their debt problems or face expulsion from the stock market.

Investors who cannot stand the heat have moved out of the kitchen, and those who are prepared to face the risk have been given due warnings

Ali Abdul Kadil, Malaysia Securities Commission

The firms have until the end of this month to submit restructuring proposals to the country's Securities Commission, and avoid the watchdog's wrath.

"The axe will fall on 31 August," commission chairman Ali Abdul Kadil told a local newspaper.

The threat comes as analysts at Standard & Poor's upgraded their rating of Malaysia's sovereign debt "to reflect the lower risk to the public purse from government support for ailing private-sector companies".

No market impact

The companies facing the stock market axe are deemed distressed, insolvent and not income-generating.

Malaysian companies are told to clean up their act

Trading in the shares of many of the firms has already been suspended or restricted.

Consequently, their expulsion from the stock exchange would not pose a threat to the market's stability, Mr Ali said.

"All the investors who cannot stand the heat have moved out of the kitchen, and those who are prepared to face the risk have been given due warnings," he said.

Mr Ali said he hoped that at least half the firms would be restructured, but offered little hope for the rest of them.

Removing the stricken companies from the bourse would strengthen the country's stock market, he said.

Companies which submitted restructuring proposals would have them rejected or approved by the end of the year.

Bright future

The S&P upgrade made Malaysia the second highest rated country, after Singapore, in South East Asia.

The rerating should reduce borrowing costs both for the government and for Malaysian firms.

Malaysia's economy is growing at an estimated 3.5%, a sharp increase on last year's performance.