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The Largest Companies In The Stock Market Of Singapore And Malaysia

There is plenty of common ground when it comes to the histories of Singapore and Malaysia. From politics to culture and commerce, the two neighbouring countries have very similar backgrounds.

In fact, when it comes to the stock market, it may surprise some of you to learn that Singapore and Malaysia had previously shared one exchange in the past. But many things have since changed when Singapore became an independent nation in 1965.

Now, there are some big differences between the stock markets of Singapore and Malaysia. Let’s take a look at the two largest listed companies from both sides of the causeway: Singapore Telecommunications Limited (SGX: Z74) and Malayan Banking Berhad (KLSE: 1155.KL). Here are three important differences between the two.

An international business vs. a domestic business

Singtel is a company with a presence in many different countries. Despite having a base in Singapore, Australia is actually the company’s largest geographical market (through Singtel’s wholly-owned Australian telco, Optus). All told, Singtel serves more than 600 million customers in 25 countries.

On the other hand, Malayan Banking Berhad – popularly known as Maybank – is predominantly a domestic company. The bank is the largest financial institution in Malaysia, with the largest asset base among all the banks in the country.

This key difference can be seen in many other companies among the constituents of the key stock market indices of both countries.

In Singapore, many listed companies have significant overseas investments because of the small domestic market. In Malaysia’s case, there are many companies with a focus on the domestic market, where the population is still growing in size and wealth. For perspective, Malaysia had a population of 29.9 million in 2014 according to the World Bank, over five times the 5.47 million people living in Singapore in that year.

Size of the business

Maybank has a market capitalization of RM82 billion (around S$27 billion). That is considerably smaller compared to the S$66.5 billion market cap of Singtel.

Given its much larger customer base around the world, Singtel generated close to S$3.9 billion in net profit in its last financial year. Maybank “only” generated a net income of RM6.6 billion (around S$2.2 billion).

Ability to churn out a profit

Singtel appears to be the more profitable company of the two. The telecommunications giant had achieved an average return on equity of about 15.6% over the past five years. Maybank lost out with an average ROE of “just” 14% over the same period.

Foolish Summary

The differences between the two largest public listed companies in Singapore and Malaysia are evident. Even the investment theses for both companies are sharp opposites. For a Singtel investor, he or she might be investing mainly for the company’s future expansion overseas. For a Maybank investor, he or she might be banking mainly on the growing domestic economy of Malaysia.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn't own shares in any company mentioned.