KUALA LUMPUR, Nov 6 (Bernama) -- Bursa Malaysia closed higher today, buoyed by supportive local economic policies, positive sentiment from strong technology stocks earnings, and a favourable United States (US) market outlook, an analyst said. Add to that, Bank Negara Malaysia’s (BNM) decision to maintain the Overnight Policy Rate (OPR) at 3.0 per cent is poised to encourage domestic spending and investment. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 13.47 points, or 0.83 per cent, to close at its intraday high of 1,634.17, compared to Tuesday’s close of 1,620.70. The benchmark index opened 3.71 points higher at 1,624.41 and subsequently hit a low of 1,623.52 in early trade before trending upwards toward the closing session. Market breadth was positive, with advancers trumping decliners 849 to 352, while 428 counters were unchanged, 765 untraded, and nine suspended. Turnover expanded to 3.39 billion units
As Malaysia prepares to introduce a 2% tax on individual shareholders receiving over RM100,000 in annual dividends, experts suggest that family-controlled companies with substantial retained profits might issue special dividends before the tax takes effect in 2025. The new tax was part of the recent Budget 2025 announcement aimed at high-net-worth shareholders, leading many companies to consider pre-emptive payouts.
According to Choo Swee Kee of TA Investment Management, paying dividends before the tax applies would allow companies to avoid an additional layer of taxation on earnings already taxed at the corporate level. Some analysts argue the tax ensures tax equity, while others see it as an extra burden on earnings.
The impact of this tax may be muted overall, affecting only major individual shareholders. For high-net-worth investors, strategies such as holding company structures may provide avenues to minimize tax exposure. For example, dividends received by family holding companies in Malaysia or through holding entities in Singapore may sidestep the 2% individual tax.
The potential impact on the market is expected to be limited, with institutional investors like the Employees Provident Fund exempt from this tax. Some market watchers anticipate minimal changes in dividend strategies, though companies with large cash reserves, like Hong Leong Industries, Oriental Holdings, and Kossan Rubber, might consider distributing more in 2024.
Market sentiment remains largely unaffected, as experts suggest most investors prioritize capital gains over dividend income. As the legislation progresses, high-net-worth investors may reassess their portfolios, potentially driving some preemptive special dividends in the final months of the year.
source: theedgemarket
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