KUALA LUMPUR: Malaysia’s capital market is expected to remain resilient and orderly, although its outlook may continue to be influenced by uncertainties in the global trade and geopolitical tensions.
This, according to the Securities Commission chairman Datuk Syed Zaid Albar, would be underpinned by the country’s strong macroeconomic fundamentals, ample domestic liquidity and supportive capital market infrastructure.
These factors would continue to support the local economy this year, Syed Zaid said in the SC’s Annual Report 2019.
He said the domestic capital market continued to channel financing to the economy last year, with RM139.4 billion raised through equity, bonds and sukuk compared with RM114.6 billion registered in 2018.
The total size of the domestic capital market expanded to RM3.2 trillion in 2019 from RM3.1 trillion the year before.
Debt securities outstanding and equity market capitalisation stood at RM1.5 trillion and RM1.7 trillion respectively (2018: RM1.4 trillion and RM1.7 trillion respectively).
Alternative fundraising avenues also continued to gain traction, especially in equity crowdfunding (ECF) and peer-to-peer (P2P) financing, with total funds raised more than doubled to RM443.8 million (2018: RM195.9 million).
A total of RM132.8 billion was raised in the corporate bond and sukuk market compared to RM105.4 billion in 2018, with issuances mainly in utilities and financial services.
Sukuk made up 77.1 per cent of total bond issuances in 2019.
Meanwhile, RM6.6 billion was raised via the equity market (2018: RM9.2 billion), of which RM2.0 billion was through new equity listings with a total of 30 IPOs and RM4.6 billion raised via secondary fundraising.
In 2019, four companies were listed on the Main Market, 11 companies on the ACE Market, and the remaining on the LEAP Market.
Notably, the size of issuances via the LEAP Market grew by 60.6 per cent year-on-year (y-o-y) to RM92.2 million in 2019 (2018: RM57.4 million).
In the fund management industry, total assets under management rose to RM823.2 billion (2018: RM743.6 billion) amid an increase in market value, driven by robust performance of small and mid-cap equities and higher net injection from dividend reinvestment.
Total net sales for the unit trust segment amounted to RM30.5 billion in 2019, a decrease of -19.5 per cent y-o-y (2018: RM37.9 billion).
In terms of portfolio flows, total non-resident inflows amounted to RM8.7 billion in 2019 (2018: portfolio outflows of -RM33.6 billion), mirroring regional trends.
The bond market recorded total inflows of RM19.9 billion (2018: outflows of -RM21.9 billion) while the equity market recorded total outflows of -RM11.1 billion (2018: outflows of -RM11.7 billion).
In the bond market, non-residents accounted for 13.7 per cent of total outstanding ringgit bonds as at end-December (end-2018: 13.1 per cent) – most of which were Malaysian Government Securities at 80.1 per cent of total foreign holdings (end-2018: 79.1 per cent).
In the equity market, foreign holdings remained stable at 22.4 per cent of total market capitalisation in 2019, in line with its five-year average.
The high level of domestic liquidity in the capital market continued to allow for orderly market adjustments of fund flows between non-residents and local investors.
The Malaysian bond market grew 7.1 per cent from RM1.4 trillion in 2018 to RM1.5 trillion at end-2019.
This was supported by higher levels of debt fundraising, sustained demand by domestic institutional investors, and favourable domestic macroeconomic conditions.
Despite the challenging environment, Malaysia was also among the emerging East Asian economies that saw local currency bond markets expand in 2019.
As a percentage of GDP, Malaysia remained the third largest local currency bond market in Asia after Japan and South Korea.
However, ongoing trade tensions, the shift in global monetary policy expectations, and general concern over slower global growth continued to drive volatility in the bond market throughout the year, the SC said.