Handbook of Singapore - Malaysian Corporate Finance (eBook)

Front Cover 1
Handbook of Singapore – Malaysian Corporate Finance 4
Copyright Page 5
Table of Contents 7
Preface 6
Contributors 12
Chapter 1. The Coporate Funding Decision 14
1.01 Introduction 14
1.02 Financial Objectives of the Firm 15
1.03 The Basic Issue: Returns and Risks 16
1.04 Short-Term Funding Decision: Current Liability Management 17
1.05 Long-Term Funding Decision: Capital Structure 19
1.06 Cost of Capital 22
References 24
Chapter 2. Financial Institutions and Markets 25
2.01 Introduction 25
2.02 Financial Institutions in Singapore 25
2.03 The Capital Market in Singapore 36
2.04 The Foreign Exchange Market in Singapore 39
2.05 Financial Institutions in Malaysia 40
2.06 The Capital Issues Committee 50
2.07 The Kuala Lumpur Stock Exchange 50
2.08 The Kuala Lumpur Commodity Exchange 51
References 51
Chapter 3. Interest Rates and Credit 52
3.01 Introduction 52
3.02 Interest Rates 52
3.03 Money, Credit and Monetary Policy 63
3.04 Practical Guide to Interest Rate Determination 67
3.05 Immunizing Interest Rate Risk 70
3.06 Conclusion 72
References 73
Chapter 4. Exchange-Rate Systems and Policies 74
4.01 Introduction 74
4.02 Choice of an Exchange-Rate System 75
4.03 Factors Leading to Singapore's Decision to Float its Dollar in 1973 77
4.04 Formulation of Exchange-Rate Policy in Singapore 78
4.05 Implementation of Exchange-Rate Policy 79
4.06 Revival of the Gold Standard? 84
References 85
Chapter 5. Role of Singapore and Malaysian Stock Exchanges 87
5.01 Introduction 87
5.02 Development of the SES 87
5.03 Structure and Operations of the SES 89
5.04 Development of the KLSE 91
5.05 Regulation of the Securities Industry 94
5.06 Functions of the New Issue Market and the Secondary Market 96
5.07 Patterns of Share Ownership 101
5.08 Efficiency of the Equity Market 102
5.09 Costs and Pricing of New Equity Issues 103
5.10 Financial Characteristics of Listed Companies 105
5.11 Capital Investment Decisions 109
References 111
Chapter 6. Raising Equity Capital 113
6.01 Introduction 113
6.02 Flotation of a Business 113
6.03 Distinction between a Public Issue and a Private Placement 113
6.04 Public Issues (Ordinary Shares) (1981-85) 114
6.05 SES Listing Requirements 115
6.06 Criteria for Listing on the First Trading Section 123
6.07 Continuing Listing Requirements/Corporate Disclosure Policy 124
6.08 Raising of Further Capital after Listing 125
6.09 Role of Managers and Underwriters 126
6.10 Public Documents/Circulars 127
6.11 Processing Time and Costs of Flotation 127
6.12 Listing Requirements of the KLSE 128
6.13 Conclusion 129
References 129
Chapter 7. Unit Trusts 130
7.01 Introduction 130
7.02 Basic Features of a Unit Trust 130
7.03 Mechanics of Investing in Unit Trusts 132
7.04 Types of Funds Operated by Unit Trusts 136
7.05 Risk-Adjusted Performance of Unit Trusts 139
7.06 Attractive Features of Unit Trusts 142
7.07 Who Should Invest in Unit Trusts 143
7.08 Summary and Conclusions 144
References 144
Chapter 8. Venture Capital 146
8.01 Introduction 146
8.02 Development of Venture Capital 147
8.03 Characteristics of the Venture Capital Process 150
8.04 Venture Capital in Singapore 155
8.05 Private Venture Capital Activities in Singapore 158
8.06 Venture Capital in Malaysia 160
8.07 Assistance Schemes for Small Businesses and Entrepreneurs in Malaysia 160
References 162
Chapter 9. Mergers and Acquisitions 163
9.01 Introduction 163
9.02 Acquisitions in Singapore and Malaysia 164
9.03 Types of Takeover 166
9.04 Potential Gains of Takeovers 169
9.05 The Regulatory Environment 171
9.06 Pricing of the Shares of Takeover Targets 175
9.07 Impact of Takeovers on the Acquiring and Target Companies 175
9.08 Summary and Conclusions 179
References 180
Chapter 10. Commercial Bank Finance 182
10.01 Introduction 182
10.02 Lending Criteria 182
10.03 Sources of Finance 183
10.04 Security 187
10.05 Conclusion 189
References 189
Chapter 11. Equipment Leasing 190
11.01 Introduction 190
11.02 What is Leasing? 190
Part I. Lease Transactions 192
11.03 A Typical Lease Transaction 192
11.04 Types of Lease 193
11.05 Reasons for Leasing 195
11.06 Negotiating a Lease 197
11.07 Evaluating a Lease Transaction 198
Part II. The Singapore Leasing Industry 199
11.08 Historical Background 199
11.09 Structure and Legislation 200
11.10 Finances 201
11.11 Marketing 202
Appendix 11.1 204
Appendix 11.2 207
References 211
Chapter 12. Factoring and Accounts Receivable Financing 212
12.01 Introduction 212
12.02 Factoring 212
12.03 Factoring Sources in Singapore and Malaysia 213
12.04 Laws Governing Factoring 214
12.05 Factoring Companies and Commercial Banks 214
12.06 Clients and Industries Suitable for Factoring 215
12.07 Types of Factoring Facility 215
12.08 Market Potential 221
12.09 Competition 222
12.10 Marketing and Operating Strategies 224
12.11 Conclusion 225
References 226
Chapter 13. Financing from Overseas 228
13.01 Introduction 228
13.02 Reasons for Overseas Financing 228
13.03 Sources of Overseas Financing 230
13.04 Types of Overseas Financing 233
13.05 Conclusion 252
Appendix 13.1 253
References 254
Chapter 14. International Trade Finance 255
14.01 Introduction 255
14.02 Payment Terms in International Trade 256
14.03 Basic Documents Used in International Trade 262
14.04 Documentation of a Typical International Trade Transaction 264
14.05 Other Sources of International Trade Financing 265
14.06 Countertrade 265
References 268
Chapter 15. Export Credit Insurance 270
15.01 Introduction 270
15.02 What is Export Credit Insurance? 270
15.03 Why Credit Insure? 270
15.04 Export Credit Insurance and International Trade Finance 272
15.05 Sources of Export Credit Insurance 275
15.06 Conclusion 277
References 277
Chapter 16. The Foreign Exchange Market 278
16.01 Introduction 278
16.02 Foreign Exchange Markets in Singapore and Malaysia 278
16.03 Foreign Exchange Transactions 281
16.04 Value Dates 282
16.05 Exchange Rate Quotations 283
16.06 Calculation of Forward Exchange Rates 285
16.07 Cross Rates 286
16.08 Arbitrage 287
16.09 Linkage Between Spot and Forward Markets 287
16.10 Currency Futures 291
References 294
Chapter 17. The Futures Market 295
17.01 Background of Global Futures Exchanges 295
17.02 Nature of Futures Contract 295
17.03 Advantages over Cash Market 296
17.04 Users and Uses 296
17.05 Raison d'être for SIMEX 298
17.06 Birth of SIMEX 298
17.07 New Organizational Structure 299
17.08 Membership 299
17.09 The Mutual Offset System 301
17.10 The Clearing House and Financial Safeguards 302
17.11 The Common Bond System and Financial Integrity 302
17.12 Margins and Financial Losses 303
17.13 Regulation 303
17.14 Promotional Strategies: Marketing, Incentives and Training 304
17.15 Benefits Arising from the CME Link 306
17.16 Future Developments 308
References 310
Chapter 18. Options 312
18.01 Introduction 312
18.02 Put and Call Options 313
18.03 Valuation of Call and Put Options 316
18.04 The Black-Scholes Call Option Valuation Formula 318
18.05 Option Trading Strategies 319
18.06 Option and Futures Market 322
References 325
Chapter 19. Taxation Aspects of Corporate Finance 326
19.01 Introduction 326
19.02 Taxation Bases of Local Providers of Capital 327
19.03 Taxation Basis of Alternative Operating Structures 338
19.04 Debt and Equity Funding 341
19.05 Taxation Aspects of Foreign Borrowings 343
19.06 Mergers and Acquisitions 345
19.07 Taxation of Dividends and Dividend Policy 346
19.08 Alternative Forms of Income 348
19.09 Leasing 348
References 349
Index 350