Zabidi leaves banking to join Malaysian watchdog

Azhar Zabidi leaves BofA Merrill Lynch Malaysia to head the regulator's marketing unit with a remit to boost the country's capital market profile.
Azhar Zabidi
Azhar Zabidi

The capital markets promotion arm of Malaysia’s securities regulator has appointed Azhar Zabidi as chief executive, as the country is convulsed by political scandal and steep declines in the value of its currency, the ringgit.

Prior to taking up his newly created position effective September 1, Zabidi served as head of origination and country client coverage at Bank of America Merrill Lynch in Malaysia, Capital Markets Malaysia, the marketing arm of the Securities Commission Malaysia, said in a memo on Wednesday.

The appointment of the investment banking veteran was made as the ringgit dropped to a 17-year low amid growing concern over an illicit money transfer from state-owned investment fund 1 Malaysia Development Bhd (1MDB) and an outflow of liquidity as oil prices continued spiraling downward.

“Azhar Zabidi will lead promotional efforts to advance the international profile of the Malaysian capital markets for investment and fund raising opportunities,” Capital Markets Malaysia, or CM2, said in the memo.

CM2 spokesman Palani Krishnam confirmed the appointment of Zabidi but declined to elaborate on the strategy to lure listing hopefuls to the Southeast Asian nation.

On a year-to-date basis, companies have raised $2.84 billion in 58 deals through the Malaysian stock market, compared with $7.3 billion in 114 transactions for all of 2014, according to data provider Dealogic.

Before taking the helm at CM2, Zabidi amassed nearly 20 years o finance industry, holding positions at RHB investment bank, CIMB, HSBC, and Bank of America Merrill Lynch, according to the memo.

Daunting remit

Zabidi has his work cut out for him. The outlook for Malaysia looks challenging given the sharp depreciation of the ringgit, which stood at RM4.299 against the US dollar on Wednesday, the lowest level since July 1998. The currency has declined 18% so far this year.

Adding to currency woes, foreign investors, who held about a third of the outstanding local currency government bonds in June, have pared down their holdings of sovereign and corporate debt by 2.4% to 206.8 billion ringgit ($50.7 billion), the lowest level in three years, Malaysian central bank data showed.

A political crisis stemming from a probe of 1MDB, the state investment fund set up by Prime Minister Najib Razak, has also come to a boil. The fund was thrust into the spotlight last year as it struggled to repay debt. In July, investigators determined that nearly $700 million had been deposited into Najib's personal bank accounts, prompting public outcry and calls for the PM to resign.

“The [1MDB] scandal shines a light on deep-seated institutional problems that will continue to hold back the economy’s long-term development,” analysts at Capital Economics, a London-based research house, wrote in a note. “Indeed, we expect growth to average a fairly disappointing 4% over the next decade,” they added.

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