[This article is in collaboration with World Federation of Exchanges and is also published on WFE focus]
In the fast-growing and diverse ASEAN region, collaboration is not just a strategy—it is the cornerstone of success. This ethos drives the region’s exchanges, which are working together to enhance market connectivity, promote regional strengths, and attract investment flows. At the recent World Federation of Exchanges (WFE) meeting, this vision of regional integration took center stage.
A significant milestone was the signing of a Memorandum of Understanding (MOU) between ASEAN Exchanges. This landmark agreement formalised their commitment to collaborate on offering Depository Receipts (DRs) across their respective markets. By doing so, the exchanges aim to broaden investment opportunities for domestic investors and position ASEAN as a premier destination for global capital.
A New Chapter in ASEAN Collaboration
The MOU marks a bold step forward in fostering an inter-connected ASEAN investment ecosystem. It sets the groundwork for developing robust regulatory and market frameworks to issue and trade DRs, enabling investors to access foreign stocks through local exchanges. This initiative not only facilitates cross-border capital flows but also strengthens the region’s appeal as a dynamic investment hub.
The MOU underscores the exchanges’ commitment to information sharing, regulatory engagement, and the promotion of listed companies. These collaborative efforts are designed to provide access to a larger ASEAN liquidity pool, paving the way for greater integration and efficiency.
Following the MOU signing, ASEAN exchange leaders participated in a panel discussion with WFE members. The dialogue provided a platform for them to share insights into how their exchanges are supporting the region’s growth. Their collective vision highlighted the critical role of exchanges in driving economic development and attracting investment flows.
Leadership Insights on ASEAN’s Growth Potential
During the panel discussion, the exchange leaders emphasised ASEAN’s immense potential as a rapidly growing and diverse economic bloc. They explored how regional collaboration can harness this potential to drive growth while respecting the unique characteristics and priorities of each market.
One of the panel’s key themes was the vital role of exchanges as enablers of capital access and investment opportunities. The leaders agreed that collaboration among exchanges can enhance their roles, making it easier for companies to raise capital and for investors to identify opportunities across the region. This approach balances the needs of various stakeholders, including businesses, retail investors, and institutional participants.
For companies, exchanges are focused on simplifying the capital-raising process and reducing time-to-market. Retail investors benefit from initiatives aimed at democratising access to investments, such as financial education programs and innovative products tailored to their needs. Institutional investors, on the other hand, gain from increased liquidity and access to reliable, standardised data.
Unlocking Cross-Border Opportunities with Depository Receipts
A focal point of the discussion was the potential of Depository Receipts (DRs) to unlock cross-border investment opportunities. These instruments allow local investors to access foreign stocks through their domestic exchanges, removing the complexities often associated with international investments.
The introduction of DRs is part of a broader strategy to foster closer collaboration among ASEAN markets. By creating a seamless pathway for investors and companies, the exchanges are setting the stage for a more interconnected and vibrant investment ecosystem.
Sustainability and the Need for Data Commonality
The leaders also discussed the importance of sustainability and data transparency in building investor confidence. Given the evolving focus on Environmental, Social, and Governance (ESG) factors in some markets, ASEAN exchanges are progressively integrating these considerations into their frameworks.
Data commonality emerged as a critical enabler for these efforts. Consistent and transparent reporting standards are essential for both sustainability initiatives and informed investment decisions. By working toward common standards, the exchanges aim to provide investors with reliable and comparable information while enhancing the region’s appeal to global investors.
Driving Regional Competitiveness Through Innovation
Innovation and collaboration remain at the heart of ASEAN exchanges’ strategies to stay competitive in a rapidly evolving global landscape. From simplifying capital-raising processes to democratising investments, the exchanges are addressing the diverse needs of their stakeholders.
Indonesia Stock Exchange (IDX) has set an ambitious goal of reaching 20 million retail investors by 2027. To achieve this, IDX is promoting larger initial public offerings (IPOs) and creating specialised boards for small and medium-sized enterprises (SMEs) and new economy companies. Additionally, the exchange is encouraging state-owned enterprises to list, further broadening investment opportunities.
Meanwhile, Philippine Stock Exchange (PSE) is leveraging technology to make investing more accessible. By integrating with the GCash app through its partner broker, PSE has simplified the process for retail investors to enter the market. The exchange is also working to reduce transaction costs and connect foreign institutional investors with local listed companies through dedicated events.
The Stock Exchange of Thailand (SET) drives growth by enhancing traditional businesses value and catering to next generation investors through education and innovative products like fractional investments. With 64 DRs offering seamless global market access, SET has seen strong interest, reflected in a trading value increase of over 50%. Committed to expanding DR offerings, SET aims to unlock new opportunities and empower investors to explore broader horizons.
Bursa Malaysia, on the other hand, is prioritising retail investor growth by engaging directly with them. It has introduced innovative direct-to-market products such as Bursa Gold Dinar, a gold investment platform that makes gold investment accessible and affordable, and BR Capital, a debt fundraising platform that offers fixed income investment opportunities for everyone. In addition, Bursa Malaysia remains dedicated to investor education initiatives, ensuring that individuals can make well-informed investment decisions.
Finally, SGX Group leverages Singapore’s position as a leading international finance hub, operating as a multi-asset platform that offers a comprehensive suite of products, including foreign exchange (FX), commodities, securities and derivatives. The exchange is also pioneering climate-related exchange-traded funds (ETFs) to support companies on a net-zero pathway, aligning with global sustainability goals.
Building a Vision for ASEAN Capital Markets
The panel discussion at the WFE meeting underscored the importance of balancing local market priorities with regional objectives. This approach not only respects the unique characteristics of each ASEAN market but also ensures that the region remains competitive on the global stage.
The collective efforts of ASEAN exchanges reflect a shared vision for creating a vibrant and interconnected regional investment ecosystem. By leveraging their individual strengths, the exchanges are fostering an environment that attracts both regional and global investors.
