KUALA LUMPUR (April 16): Securities Commission Malaysia (SC) said today that major global developments will continue to influence the outlook for the domestic capital market in 2020, with volatility mainly due to the direction and pace of global economic growth and the direction of monetary policy. the uncertainty of trade and geopolitical tensions.
The SC said in its 2019 annual report that greater clarity in ongoing domestic policy reforms would also influence the performance of the local capital market, which reached RM3.2 trillion in 2019.
“Nonetheless, the Malaysian capital market will continue to support economic growth through funding for business expansion and infrastructure.
“Activities in the global capital market will continue to be shaped by developments in the global economy and relatively easy global financial conditions, aided by the prospect of continued accommodative global monetary policies.
“However, volatility is likely to persist, given the heightened risks to growth. The outlook for global equities is expected to remain generally positive, supported by the continued commitment of global policymakers to support growth.
“Nonetheless, a prolonged period of low interest rate environment will likely intensify yield-seeking trends, further contributing to already strained valuations in some equity markets.
“In the global bond market, performance will continue to reflect overall trends in global risk aversion, with the shape of the yield curve expected to remain relatively flat,” the SC said.
Looking back, the SC said that in 2019, the domestic capital market continued to play an important role in financing the Malaysian economy. According to the SC, the size of Malaysia’s capital market grew to RM 3.2 trillion in 2019, from RM 3.1 trillion a year earlier.
For 2019, the SC said the outstanding debt securities and market capitalization of the shares were RM1.5 trillion and RM1700 billion, respectively. In 2018, outstanding debt securities and market capitalization were RM.1400 billion and RM1700 billion, respectively, according to the SC.
“Despite the difficult global environment and ongoing domestic policy reforms, the Malaysian capital market saw a higher level of fundraising activity during the year, with total funds raised in bond markets and scholarships amounting to RM139.4 billion in 2019 compared to RM114.6 billion in 2018.
“Other funding channels also continued to gain ground, particularly in ECF (equity crowdfunding) and P2P (peer-to-peer) funding, with total funds raised more than doubling to 443.8 million RM (2018: 195.9 million RM)
“A total of RM 132.8 billion was raised in the corporate bond and sukuk market, up from RM 105.4 billion in 2018, with issuance primarily in utilities and financial services.
“Sukuk accounted for 77.1% of total bond issuance in 2019. Meanwhile, RM 6.6 billion was raised through the stock market (2018: RM 9.2 billion), of which 2, RM 0 billion through new share listings with a total of 30 IPOs (initial public offerings) and RM 4.6 billion raised through secondary fundraising.
“In 2019, four companies were listed on the main market, 11 companies on the ACE market and the rest on the LEAP market.
“In particular, the size of issuance through the LEAP market increased by 60.6% year-on-year to reach 92.2 million RM in 2019 (2018: 57.4 million RM).
“In the fund management industry, total assets under management (assets under management) reached RM823.2 billion (2018: RM 743.6 billion) against a backdrop of increasing market value , driven by the strong performance of small and mid-cap stocks and a higher net injection of dividend reinvestment.
“Total net sales of mutual fund segment were RM30.5 billion in 2019, down 19.5% year-on-year (2018: RM37.9 billion) . “
In terms of portfolio flow, the SC said total non-resident inflows amounted to R8.7 billion in 2019 compared to RM33.6 billion outflows in 2018.
The SC said that the bond market recorded inflows of 19.9 billion ringgit in 2019 compared to outflows of 21.9 billion ringgit in 2018. The equity market recorded outflows of 11.1 billion ringgit in 2019 compared to outflows of Ringgit 11.7 billion in 2018, according to the SC.
“In the bond market, non-residents accounted for 13.7% of total ringgit bonds outstanding at end-December (2019) (end-2018: 13.1%) – most of which were Malaysian government securities (AMS) ) to 80.1% of total foreign bonds. participations (end of 2018: 79.1%).
“In the equity market, foreign holdings remained stable at 22.4% of total market capitalization in 2019, in line with its five-year average. non-residents and local investors, ”the SC said.