KUALA LUMPUR (June 24): Companies with good environmental, social and corporate governance (ESG) practices have been more resilient since the start of the Covid-19 pandemic as investors’ growing concerns over damage to the environment have led them to put more value on the effective management of ESG risks.
Bursa Malaysia Bhd chief executive officer (CEO) Datuk Muhamad Umar Swift said while sustainable finance is still emerging in ASEAN capital markets, governments and regulators are making some meaningful efforts to promote and support the endeavour.
“The Covid-19 pandemic is widely seen to have given sustainability further impetus. Millennials and Gen Z are showing greater concern with respect to sustainability and changing expectations of businesses’ role in improving society and protecting the environment,” he said in his opening speech at the ASEAN: Beyond the Pandemic Crisis virtual conference today.
At the regional level, he said key developments include using the ASEAN Green Bond Standards, the ASEAN Social Bond Standards and the ASEAN Sustainability Standards to foster greater transparency and consistency across the region, whereby doing so reduces due diligence costs for investors.
“Preliminary work has also commenced for an ASEAN taxonomy of sustainable finance. In Malaysia, we have seen the development of climate change and principles-based taxonomy by Bank Negara Malaysia (BNM) and the Securities Commission Malaysia’s (SC) SRI (Sustainable and Responsible Investment) road map for the Malaysian capital market.
“For Bursa, sustainability has always been a significant growth driver, with our approach having considerable influence on the ecosystem — for our public listed companies, investors and capital market intermediaries,” he said.
With several recent listings of companies involved in the renewable energy space, Bursa sees a potential growth area, given increasing priority by consumers and investors on the sustainability front, Umar said.
“These are some of the important steps that will help drive sustainability across the region. We are confident that the integration of sustainability best practices will see a successful transition to a genuinely sustainable economy for the ASEAN region,” he said.
Meanwhile, during the panel discussion, the panellists seemed to agree that there is light at the end of the tunnel with a buoyant market outlook anticipated for ASEAN, with ESG and technology stocks leading the charge.
During the session, ASEAN stock exchange leaders and economists shared the view that structural shifts will happen with technology but regulatory frameworks need to be there to bolster any transition to ensure investors’ integrity is in place.
Maybank Kim Eng Group (MKE) CEO Datin Ami Moris said the MSCI ASEAN Index had been underperforming, with institutional fund flows for both active and passive funds that had, for the most part, turned to net outflow positions.
She said ASEAN local investors are increasingly looking beyond the perceived old economy exchanges for areas of investment opportunities that are more in sync with their principles as alternatives are now made more accessible.
“But there are also positives, such as our MKE economists projecting buoyant economic growth over the next two years and ASEAN standing a fair chance of tapping into surging global sustainability assets under management to the likes of US$53 trillion (about RM220.74 trillion) expected to be invested in ESG growth opportunities,” she said.
Singapore Exchange senior managing director and head of equities Michael Syn said as new economy stocks such as Grab, Gojek and Tokopedia are being included in the MSCI ASEAN Index, he expects the homecoming of these stocks, similar to what has been happening in Hong Kong.
“Our economies have done a very good job in providing a growth story that is regional for these new economy stocks and in the very near future, I expect that they will be returning to our markets,” he said.
In efforts to retain unicorn investors in the regional market, Stock Exchange of Thailand president Dr Pakorn Peetathawatchai said ASEAN stock exchanges need to look at ways to groom start-ups in the region.
“There are at least three things that we need to support them — provide an education platform for start-ups, provide them with a vibrant environment to enable them to scale up, as well as providing them the funding and trading platform,” he said.
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