Malaysia to Press Listed Firms on El Nino Readiness, Eyes Middle East Regulatory Ties

Malaysia's Securities Commission plans to ask publicly traded companies to set out how they are preparing for El Nino, amid concern that businesses in the country may be underprepared for the weather phenomenon, its chairman said.

Forecasters have warned of a possible super El Nino, which can bring prolonged heat and drought across Southeast Asia. Hotter, drier conditions can reduce crop yields and strain water supplies, with Malaysia's palm oil industry seen as particularly exposed.

"We're going to send a letter to all the major companies just to ask them: So actually, what is your El Nino plan?" chairman Mohammad Faiz Azmi said in an interview during an investor roadshow in the UK. The regulator would then follow up with companies next year to assess whether those plans worked, he said.

While market regulators in several countries have for some time required disclosures on climate and weather impacts, requests tied to specific events are typically not made public even when they are issued.

Mohammad Faiz said the exercise would test whether companies' climate-risk disclosures translate into effective preparation. Many firms, he argued, had not seriously considered how they would cope with drought because Malaysia has historically had ample water resources.

Separately, he said the commission was exploring closer ties with regulators in the Middle East as part of efforts to deepen Islamic finance links and channel more capital flows into Southeast Asia. As a first step, regulators are analysing differences in how jurisdictions classify stocks as compliant with Islamic law, or Sharia.

The Securities Commission signed an agreement with Hong Kong's Securities and Futures Commission in July that will allow companies pursuing dual listings to use a single prospectus and set of submission documents starting this month.

Mohammad Faiz said Sarawak Energy was one IPO candidate the commission was encouraging to consider such a dual listing to achieve a better valuation. He said the company could reach a valuation of around $10 billion when it eventually comes to market. Sarawak Energy did not respond to a request for comment outside office hours.

Asked whether AirAsia was on the regulator's surveillance watchlist, Mohammad Faiz said he could "neither confirm nor deny" that, adding that the government had hired consultants to review the carrier's finances, though he was unaware of any plans for a takeover. AirAsia did not respond to a request for comment. AirAsia co-founder Tony Fernandes said on Friday that there had been no discussions with the government and that the airline did not need any rescue or bailout.

On the stock exchange's plans, Mohammad Faiz said the government aimed for Bursa Malaysia's market capitalisation to rise to 6.3 trillion ringgit ($1.55 trillion) over five years, from around 4.5 trillion ringgit at present.