KUALA LUMPUR: Malaysia has ample liquidity in the capital market to buffer foreign sell-off activity which currently stands at RM4.86 billion year-to-date.
Securities Commission (SC) chairman Datuk Syed Zaid Albar said Malaysia has a strong fundamental in macroeconomic backed by well poised stockbrokers and intermediaries.
“This is what we try to improve - on discipline and allow more liberties to make the market resilient,” said after launching the Institute for Capital Market Research’s first joint-research titled “The Evolving Business of Asset Management: Malaysia’s Perspective”, with the Japanese Nomura Institute of Capital Markets Research.
In relation to licensed capital market intermediaries, SC said their compliance with financial requirements remain relatively strong, as a high percentage of intermediaries are well-capitalised with sufficient liquidity positions, while clients’ margin exposures are well-managed.
He said the regulator operates in a fair and orderly manner with strong governance to drive and support a market-friendly and vibrant capital market.
Further, Malaysian capital market continues to provide an avenue for mobilisation and utilisation of long-term funds for development.
Syed Zaid expected the US-China trade tension to continue and expressed uncertainty on the outcome.
“There is an indication that it may not be ending soon,” he said.
Yesterday, the Federal Open Market Committee (FOMC) hinted that the US Federal Reserve likely to reduce its interest rate.
Market analyst said the reduction in interest rate allows companies who have US-denominated debt to have lower loan repayment, while prompting investors to shift their investment to other emerging markets.
SC is confident that the Malaysian equity market will remain resilient despite the uncertainty in emerging markets over the sustainability of global economic growth.
In addition, SC and Bursa Malaysia Bhd had introduced several initiatives over the years to enhance the competitiveness of the Malaysian capital market.
While some market vibrancy measures have faced headwinds in light of global uncertainties, the regulator and Bursa Malaysia will continue to work with the industry to identify new business opportunities and growth areas, as well as design a facilitative and efficient ecosystem to enhance the attractiveness of the market.
Syed Zaid said domestic corporate investments would still be a good investment strategy for investors as it has strong valuation in terms of earnings.
He said SC and Bursa Malaysia also remain committed in their efforts to ensure the Malaysian capital market continues to grow and support the economic needs of Malaysia.
On average, the local equity market has raised RM16 billion per annum in the last five years, while the equity market capitalisation recorded at RM1.7 trillion as at end-April 2019.
Healthy growth in Malaysia’s fund management industry’s asset under management, which currently stands at RM786 billion, has enabled greater mobilisation of savings and expansion of other market segments.
Over 900 small and medium enterprises (SME) have also benefitted from equity crowd-funding and peer to peer (P2P) financing arrangements, which saw these companies successfully raise close to RM350 million over the last three years for their business expansion.