Chong's thesis titled "Valuation of Convertible Loan Stocks on the Kuala Lumpur Stock Exchange" for his Masters in Business Administration (MBA) at Universiti Sains Malaysia (USM), clinched the award for the post graduate category of the CMA; the prize being a trophy and RM7,500 cash.

Chong's research paper looked into whether there was under pricing of local convertible loan stocks (CULS) compared with a theoretical model. The paper presented his research based on an empirical study on convertible loan stocks traded on the Kuala Lumpur Stock Exchange (KLSE). Chong used the closing prices of CULS on the KLSE between January 1995 and December 1997 and employed the Black-Scholes Option Pricing Model to determine theoretical prices.

The study found that there was significant under pricing in the market price of CULS and presented a refreshingly strong conceptual illustration for the valuation of convertible loan stocks and Irredeemable Convertible Unsecured Loan Stocks (ICULS). The conclusions drawn were consistent with the results from the analysis thus reflecting the validity and reliability of the research paper.

Chong, an Operations Manager with a manufacturing plant in Bayan Lepas, Penang, was inspired to choose the subject of loan stocks despite the subject having no relevance at all to his daily work, nor even his first degree of Bachelor of Computer and Communication Engineering. (He is at the moment undergoing training in San Jose, California, the heart of Silicon Valley and will be back in Malaysia only in March 1999).

"I played a bit in the KLSE and was looking at some other investment stocks. Since I did not understand much about CULS and ICULS, I thought it was a good idea to study this for both academic purposes as well as investment purposes," he said.

"The topic has not been studied extensively and by studying it, may give some clues as to why this is not a hot topic among Malaysian investors. In the US, investors do not seem adverse to the bond market as in Malaysia."

His inspiration was his MBA supervisor Dr Subramaniam Pillay who is the Finance expert from the Management Faculty of USM. Dr Subramaniam was also the one who encouraged him to take part in the Award competition. Chong is also grateful to his wife for her patience throughout the long months while he was working on the paper.

As for his cash prize, he plans to keep the money in Malaysia. His advice to budding researchers who want to give the CMA a shot is to "get a project which one has a personal interest in, to extend one's knowledge and don't do repeats of other studies."

The SC introduced the CMA in 1995 to create an awareness of, and encourage quality research in, the Malaysian capital market. The award competition is a means of generating interest among students and academics to contribute ideas and conduct research on topics and issues related to the capital market.

Entries may be in the form of project papers, thesis or dissertations. Each year the SC offers a total of four awards, comprising a cash prize and a trophy. One award is allocated for the best paper from faculty members with a cash prize of RM10,000, two awards of RM7,500 each for postgraduates and one award worth RM5,000 for undergraduates.

The CMA Review Committee comprises the SC Chairman Dato' Dr. Munir Abdul Majid (Chairman) and SC Commissioners Datuk Haron Siraj who is also the Secretary-General, Ministry of Primary Industries, and Raja Datuk Arshad Raja Tun Uda who is the Executive Chairman of Price Waterhouse Coopers, Malaysia.

The CMA competition received good responses from local universities this year with a total of 12 entries, compared to only five last year. Four entries came from local postgraduates, two from undergraduates, five from faculty members and one from a foreign postgraduate.

However only one award was given for the postgraduate category. The participating universities were USM, University Malaya, Universiti Putra Malaysia, University Islam Antarabangsa and Institute Teknologi Mara.

While the local papers submitted this year covered an impressive range of interesting topics, the Review Committee also commended a foreign entry written by a Than Su-Ee, a postgraduate at University of Cambridge, United Kingdom. Although his paper entitled "Real options, A new paradigm in capital investment appraisal" did not win an award as it did not contain Malaysian case studies or examples it was nevertheless regarded as a significant contribution in the understanding and development of Discounted Cash Flow (DCF) techniques. Real options refer to deferments, contracts, shutdowns, abandonment and other such options embedded in investment opportunities often ignored by DCF techniques.