KUALA LUMPUR, Feb. 6 (Xinhua) -- Malaysia and Singapore announced Tuesday that a stock market corridor will be established for investors in the two countries to access to each other's markets with a combined market capitalization of more than 1.2 trillion U.S. dollars.
Malaysian Prime Minister Najib Razak said both he and his Singaporean counterpart Lee Hsien Loong agreed that "both markets have reached a sufficient level, sophistication and degree of maturity for us to establish a market corridor connecting Malaysia and Singapore."
The move is to link the two countries' respective exchanges in order to spur further mutual benefits and harness the economic potential in the region, Najib said in his speech delivered at the country's fifth World Capital Market Symposium on Tuesday.
According to Najib, a regulatory arrangement will be worked out by the two countries' relevant regulatory authorities, to pave the way for the establishment of the trading link.
The link will combine 1600 public listed companies in the two countries with a market capitalization of more than 1.2 trillion U.S. dollars.
"This exciting initiative will indeed widen investment options for investors and contribute towards greater activity and vibrancy in both countries," Najib said.
In a joint statement Tuesday, the Monetary Authority of Singapore and the Securities Commission Malaysia said the two regulators will work together to facilitate the establishment of a stock market trading link between Bursa Malaysia, Malaysia's bourse and Singapore Exchange (SGX) by the end of this year.
The initiative followed the ongoing efforts of the ASEAN Capital Markets Forum (ACMF) to deepen financial connectivity across the region's capital markets.
"The trading link will allow investors to trade and settle shares listed on each other's stock market in a more convenient and cost efficient manner," said the statement, adding that retail investors will benefit from such a link.
In relation to this strategic initiative, the Monetary Authority of Singapore and the Securities Commission Malaysia will set up cross-border supervisory and enforcement arrangements, and work together with the two exchanges to operationalize the link.
Securities Commission Malaysia chairman Ranjit Ajit Singh said the establishment of this trading link is an important step towards encouraging ASEAN investors to invest in ASEAN.
"The ease of accessibility for investors will contribute towards greater vibrancy in our markets. Once operationalized, this pilot initiative can form the basis for future connectivity among ASEAN markets," he added.
Lee Boon Ngiap, assistant managing director of the Monetary Authority of Singapore, said the trading link will help lower trading costs for investors and encourage greater cross-border investments in the stocks listed on each other's exchanges.
"This will improve the liquidity of both our stock markets. I hope this initiative will in time expand to include the rest of the stock exchanges in ASEAN," he added.