The circle was completed for Citi’s Malaysia operations last week when the bank launched a new equities brokerage business under the name of Citigroup Global Markets Malaysia (CGMM) that will give its clients direct trading access on the domestic stock exchange.
“Equity broking was the one product we didn’t have in our product arsenal until now,” said Sanjeev Nanavati, chairman of CGMM and chief executive officer of Citibank Bhd. “This completes the circle and provides full capital markets coverage," he added.
At the official launch in Kuala Lumpur, Shirish Apte, chief executive officer for Citi Asia-Pacific, pointed out that Malaysia is a priority market for Citi in the region. “This investment underlines our commitment to the country,” said Apte.
Citi has been expanding its research coverage of Malaysian equities, and now covers stocks representing 86% of the MSCI Malaysia index and 87% of the FTSE Bursa Malaysia KLCI index by market capitalisation.
“Obviously this is a great incentive for us to cover more stock,” said Nanavati, who expects the new business to be among the top three foreign brokers and attain a 3% market share of trading volumes once it is operating at full steam.
Currently its product line offers pure cash equities. “We will do more structuring in time and create more products,” said Nanavati, “but at this particular moment it's about getting the operation up and running and making sure that execution works smoothly.”
One market in particular that Citi is aiming to tap into is the growing amount of Middle East funds flowing into Malaysia. With Citi's current presence across the Middle East -- it covers more than 100 clients and has assets under management of more than $1 trillion --- the bank sees itself as being well placed to manage some of these flows through CGMM.
Citi has helped Malaysian companies raise over $7 billion in the domestic and international capital markets in the past three years, according to Dealogic data. Nanavati expects the new business to further increase its presence, particularly by servicing the buy-side community more comprehensively.
“This membership completes the range of our product platform for our clients and underlines our continued investment in our Asia-Pacific equities franchise to help our regional and global clients that are increasingly looking to invest in Asian equities, given the region’s growth potential,” said Adrian Faure, Citi’s head of equities for Asia-Pacific.
Citi started equities brokerage operations in Indonesia in early August. The next target is believed to be Vietnam where Citi is said to be taking a minority stake in a local broker.