Handling non-public info properly

THE issue of disseminating non-public information via investment analysts’ reports – whether in written format, electronically, on social networks like WhatsApp, or even within Telegram chat groups – has recently come to the forefront.

It is believed that regulators are concerned about this trend and are seeking to address the issue head-on, clarifying what an analyst can or cannot include in research reports and how information should be communicated.

Another concern relates to listed issuers, where key personnel – especially board members, executive directors, or senior executives such as the chief financial officer or head of investor relations (IR) – maintain constant contact with the investment community, including fund managers and analysts, while excluding the general public or other investors, particularly retail investors.

The Securities Commission’s (SC) “Guidelines on Market Conduct and Business Practices for Investment Analysts and Their Analysts” do spell out what is expected of the profession when it comes to the dissemination of information to the public.

The guidelines were issued pursuant to Section 377 of the Capital Market and Services Act 2007.

Dealing with information

It is normal for an analyst to maintain close contact with the companies they cover to ensure accurate understanding of the business, strategies, fundamentals, and to make informed judgments on valuation.

Analysts also issue recommendations – “buy”, “sell”, or “hold” – based on these fundamentals, the company’s strategies and prospects, and the assumptions underlying their analysis.

The SC’s guidelines when it comes to the dissemination of information require research firms to have proper policies and procedures to regulate the flow of unpublished or proposed research reports and recommendations.

The guidelines also state that communications with investors, sales, and trading teams must only be in respect of previously published reports and publicly available information.

The guidelines also require investment analyst reports and recommendations to be disseminated responsibly in a timely manner to manage market impact and enable investors to make informed decisions.

According to the SC, research recommendations must be based solely on publicly available facts.

If an analyst receives material non-public information, they must refrain from providing research services or recommendations related to that information.

Market reality

Analysts cover multiple companies within their sector and frequently interact with these corporates through one-on-one meetings, investor roadshows, company visits, analyst briefings, or even direct phone calls and electronic messages.

In such interactions, there is always the possibility that non-public information may be disclosed to analysts or fund managers.

Some of this information, particularly if it is material, could trigger market price movements.

This raises a key question: how do analysts determine whether the information they receive is non-public, material, or otherwise?

Information is considered public if the company has disclosed it through Bursa Malaysia filings or official press statements, regardless of whether it is material.

Non-public information – material or otherwise – must not be included in an analyst’s report.

The situation becomes more complicated when such information is discussed verbally during conference calls or direct communications with fund managers.

In some cases, non-public material information has even been published by brokerage firms, causing market price movements due to the sensitive nature of the disclosure.

Not journalist

Becoming an investment analyst requires deep knowledge of financial markets, an understanding of industry dynamics, excellent report-writing skills, proficiency in financial modelling, and the ability to forecast forward earnings over at least the next one to two years.

While valuing a company remains an art due to the variety of valuation methods, it is ultimately the market call that really matters, driving investor action.

Hence, analysts are not journalists; they actively seek information and updates from the companies they cover.

Much of this information may be non-public, and analysts may interpret the same data differently.

This is where the mosaic theory comes into play: analysts use information from multiple sources to form an opinion without violating any guidelines, regulations, or legislation.

Accordingly, while the SC guidelines prohibit analysts from discussing material non-public information, analysts should not be faulted for using such information as part of their analytical process.

Gamuda

In the recent case of Gamuda Bhd, market whispers circulated between analysts regarding the company’s ability to meet its profit projections or maintain its order book.

The share price began weakening in mid-January 2026, coinciding with the crossing of 186 million shares at 0.1 sen each on Jan 13, 2026.

This was due to the issuance of five-year US$300mil Secured Exchangeable Trust Certificates exchangeable into ordinary shares of Gamuda, issued by a special-purpose vehicle, Lunas Capital II Ltd, set up solely by Permodalan Nasional Bhd (PNB), with the trade date on Jan 15, 2026.

The transaction was not publicly disclosed by PNB or Gamuda (and presumably Gamuda was unaware, as it was not a party to it).

Nevertheless, the impact on Gamuda’s share price – whether from the issuance of the notes or from profit warnings shared with selected analysts – was material.

Some analysts lowered their projections, prompting others to follow suit.

This raises key questions: can such information be considered public or non-public?

Should the analyst who issued an “adverse” call on Gamuda be blamed, or should the company disclose the information publicly before informing select analysts?

Alternatively, should PNB have made the details of the exchangeable notes public?

The role of IR

For a listed entity, the role of IR is utmost important as it is the central communication channel to the media, public, analysts, and fund managers.

Key IR events include the annual general meeting and quarterly analyst briefings, which update investment analysts, fund managers, and sometimes the media.

These briefings should be treated as the company’s effort to make information public, with presentation materials uploaded to both the company’s website and Bursa Malaysia’s platform.

Where possible, transcripts or podcasts of these briefings should also be made available online, allowing investors to access the information remotely.

Getting it right when it comes to the dissemination of non-public information, particularly material information, has become a challenge for both regulators and the investment fraternity.

It is time to review the manner in which this is regulated, with a greater burden placed on the companies to communicate information publicly rather than selectively to analysts or fund managers.