KENANGA MANAGING DIRECTOR'S MANAGEMENT DISCUSSION AND ANALYSIS

CORPORATE HIGHLIGHTS Completion of Acquisition In the third quarter of 2019, Kenanga Investors Berhad (“ KIB ”), the asset management subsidiary of Kenanga Group, completed its acquisition of 100% equity share in Libra Invest Berhad (“ LIB ”), a fund management arm of ECM Libra Financial Group Berhad. The acquisition, has increased KIB’s total assets under management (“ AUM ”) to RM13.5 billion, solidifying its position as one of Malaysia’s leading unit trust and asset management companies. Now, with broader product offerings, cost synergies, and widened distribution channels and agency force, the business is primed to fast-track growth, profitability and market leadership. New Product Line Up Heeding the call for products that capitalise on market volatility and the need for alternative investment instruments, the Group launched retail securities borrowing and lending (“ SBL ”) in July 2019, in a move to boost retail participation in a segment typically reserved for institutional investors. Through lending of stocks for short- selling, hedging or arbitraging, individual shareholders are now able to optimise their portfolio across varying market conditions. As mentioned, we successfully listed an innovative, first-of-its-kind ETF on the Main Market of Bursa Malaysia Securities Berhad (“ Bursa Malaysia ”) earlier this year, broadening the accessibility of unconventional investment avenues for traders. This new product allows traders to hedge against price swings, amplifying gains even during market corrections. While both SBL and ETFs are still in their early stages in South East Asia, they have been garnering strong traction and showing tremendous growth potential. Through our continued efforts to promote and raise awareness of these innovative products, we look forward to them becoming mainstream investment options, which will enable our retail investors to make the most of their participation in the capital markets, leading to a more vibrant marketplace. Digital Innovations During the year, we continued to make headwayonour digital journey, focusing on customer-centric technologies and automation of operational processes. Working hand-in-hand with our IT partners, we beta tested our Algorithmic Trading platform towards the end of 2019. Combining predictive analytics with data processing speed, this platform is set to transform the trading landscape for our dealers and customers. We aim to fully release it by this year. Complementing our suite of asset management products, we target to rollout an investment robo- advisory platform for the mass market towards the end of Q4 2020. With rapid consumer shift towards Fintech, especially amongst younger investors, this platform, which provides fully automated, AI-driven financial investment service, will spur the acquisition of an underserved segment in the marketplace. On the operational front, our approach was predicated on balancing the maintenance of legacy systems, with practical investments in new technologies. We have further harmonised the front and back end systems via Robotic Process Automation and Enterprise Workflow Management, in a bid to build a robust end-to-end IT ecosystem for the Group. As part of our plan to enable full mobility to our remisiers, we launched a new platform this year which has digitalised most of the core workflows, unlocking new levels of efficiencies. We expect to enable full mobility for our remisiers by end of 2021 – where onboarding clients, trades and settlement, as well as, remisiers’ business management can be executed anywhere, through this remisiers’ service portal. Further to this, we will be exploring the adoption of Cloud-based solutions this year, which will bring about greater scalability, faster speed-to-market and further cost effectiveness. Our joint-venture with Japan-based Rakuten Securities Inc., Rakuten Trade Sdn Bhd, which has now been operating for three years as Malaysia’s completely online equity broker, continues to record remarkable growth. It doubled its subscription base from the year before, recording 47,500 accounts at the end of 2019, and registering almost RM8 billion in trading value on Bursa Malaysia. This was attributed to three innovative rollouts – Contra 2.0 (enhancement to their Contra Account launched in 2018), ID Linkage in partnership with AirAsia BIG and improved eKYC (e-Know Your Customer). In a move to advance our digital capabilities, we formalised a three- year Digitisation Roadmap to further streamline focus and resources, accelerate implementation, and ultimately optimise cost structure. Approved by the Board of Directors in 2019, the Roadmap charts a holistic framework that supports the generation of new ideas, in tandem with driving transformative initiatives within our existing businesses.