Tutorial Week 10 MFA3053

Group Members (KME3)

1. Syaza Nur Anati Binti Abd Khalik (1180800)

2. Nur Anis Insyirah Binti Abu Bakar (1180803)
3. Siti Najihah Binti Shamsulbahari (1180798)
4. Noraisyaamira Binti Mohd Madzlan (1180796)
5. Syazana Athirah Binti Mohd Sazeri (1180806)

Question 1

Discuss the impact to the Malaysian Capital Market

A. There is lack of funds for investments.

- By providing greater cash for investment, retirement funds may directly fuel
economic development. Furthermore, and perhaps more importantly, funded
pensions may develop private capital markets, resulting in improved capital
allocation and overall performance. Therefore, when the government allows
account holder 1 for withdrawing their money up to Rm 10,000, some of them
will take this opportunity to withdraw their money and put it in other banks or
other places. This would result to the deficit amount of investment fund for
the purpose of investment in the capital market.

B. There is positive impact on capital market.

- The EPF has diversification in their investment including the stock market,
Real Estate Investment Trust (REIT) and fixed income. On the other hand,
EPF also as a one of the big major players in the equity market, so that they
have sufficient liquidity to support the market. Furthermore, the withdrawal
from the EPF increase the community pocket money then this means the
participation of retail become more active. Public can use the money
withdrawal to invest more in capital market. Apart from that, based on the
securities commission annual report show that RM 14.3 billion from retail
investors are in the stock market in 2020.
C. EPF Withdrawal Impact to the Declining Their Pension Funds.
 There is negative impact as Employees Provident Fund (EPF) members can now
withdraw up to RM10,000 from their Account 1. This statement can be illustrated
that, in the perspective of EPF, the withdrawal should have been used as
employees' savings will be lost. However, the withdrawal of the savings will
affect the EPF's cash flow managed for future use by contributors through
investment activities. when the EPF withdrawal is approved by the government, it
will affect the contributors where their saving in the time is declining which will
likely have an impact for use in the pension age of the contributors or in the
future. Therefore, the government should put a requirement that entitles
contributors to make withdrawals so that their savings guarantee the future in line
with the use of the EPF.

D. Instant Cash and help boost the economy.

- During the pandemic covid-19, the global population problem is jobless due to
economic. A lot of people facing a sudden financial shock and need to struggle to
maintain their day needs. Within the EPF Account 1, it will be staggered over six
months will at lessen the burden and can be used as a top up for the basic needs.
When people withdrawal, it can help to further accelerate the economic recovery
because people have more cash in hand, and they will spend for the basic needs. It
will be turned to accelerate business activities as the will be demand for goods and
services.

E. Termination of An Agreement.
- There have been many commentaries which related to Force Majeure and
Material Adverse Change clauses circulating since COVID19 occurred. From equity
offering perspective, the underwriters and issuer enter into an underwriting agreement
for the sale of securities and a Force Majeure clause, or a Material Adverse Change
clause is often included under the termination provisions. Then, since pandemic
COVID19 occurred, the signatories to the agreement must be alert. This is because it
will lead to unfair in signing for any agreement where the underwriters have a
potential termination right as it is already triggered by COVID19. One of the solutions
for the problem occurred is to determine with clause which only be triggered if the
MCO is to prolong because it was something that cannot be predicted.