Prime Minister Datuk Seri Abdullah Ahmad Badawi hosed down speculation on Nov 15 that the government might float the country's biggest company, state-run oil firm Petroliam Nasional Bhd (Petronas), on the local stock exchange.

Abdullah, speaking to Umno's annual general assembly, said a listing of Petronas would be a quick fix for those who wanted to inject more life into the thinly traded Malaysian market.

"Petronas alone would add at least RM400 billion to the market capitalisation of Bursa Malaysia and overnight transform it into one of the biggest stock exchanges in Asia," he said.

"But we will not forfeit strategic national interests solely for short-term gain. Attracting investment and developing the stock market is not as simple as preparing instant noodles."

Malaysia's market is worth about RM800 billion and already includes two Petronas units, gas distributor Petronas Gas Bhd and petrol retailer Petronas Dagangan Bhd.

But the market is one of Asia's most thinly traded, partly because about a third of its listed equity is tightly held by the government. Small caps routinely generate more trade than the big state-linked blue chips that dominate market value.

Stock exchange operator Bursa Malaysia Bhd, itself part-owned by the state, has gently prodded the government to sell down more of its holdings, which range across most major market sectors, from telecoms and banking to construction and property.

But the government has shown little inclination to do so, apart from two outstanding bond issues that are convertible into portions of its holdings in dominant phone company Telekom Malaysia Bhd and toll road operator PLUS Expressways. - Reuters

What is the point of listing PETRONAS on the main board when the reason behind why the Malaysian market is a thinly traded one is because a thrid of its listings is tightly held by the goverment. Adding PETRONAS into the equation does not improve the local market situation only until PETRONAS becomes an independent private/public equity. Merely listing it on the market will only result in highering the risk for PETRONAS' future investments due to the proven trakc record of the regional market instability.

The only way for PETRONAS to boost its investments and status is through foreign listing ie London Stock Exchange/Dubai Stock Exchange/WallStreet.

The Edge Article