KUALA LUMPUR, April 16 — The domestic capital market continued to play an important role in financing Malaysia’s economy in 2019, said Securities Commission Malaysia (SC).
In its 2019 Annual Report released today, the regulator said the total size of the capital market expanded to RM3.2 trillion in 2019 from RM3.1 trillion in 2018, with debt securities outstanding and equity market capitalisation of RM1.5 trillion and RM1.7 trillion respectively (2018: RM1.4 trillion and RM1.7 trillion respectively).
“Notwithstanding the challenging global backdrop and ongoing domestic policy reforms, Malaysian capital market witnessed a higher level of fundraising activities during the year, with total funds raised in the bond and equity market amounting to RM139.4 billion in 2019 compared with RM114.6 billion in 2018,” it said.
According to the SC, alternative fundraising avenues also continued to gain traction, especially in Equity Crowdfunding (ECF) and Peer-to-Peer (P2P) financing; as the total funds raised had more than doubled to RM443.8 million in 2019 versus RM195.9 million in 2018.
“Meanwhile, RM132.8 billion was raised in the corporate bond and sukuk market compared with RM105.4 billion in 2018, with issuances mainly in utilities and financial services,” it said, adding that sukuk made up 77.1 per cent of total bond issuances in 2019.
The SC said in 2019, RM6.6 billion was raised via the equity market against RM9.2 billion in 2018, of which RM2.0 billion was through new equity listings with a total of 30 Initial Public Offerings (IPOs) and RM4.6 billion raised via secondary fundraising.
Last year, 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 60.6 per cent year-on-year (y-o-y) to RM92.2 million in 2019 versus RM57.4 million in 2018, it said.
In the fund management industry, the SC said total assets under management (AUM) rose to RM823.2 billion in 2019 from RM743.6 billion in 2018 amidst 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, declining 19.5 per cent y-o-y from RM37.9 billion in 2018,” it said.
In terms of portfolio flows, the SC said total non-resident inflows amounted to RM8.7 billion in 2019 as opposed to portfolio outflows of RM33.6 billion in 2018, mirroring regional trends.
“Bond market recorded total inflows of RM19.9 billion in 2019 versus outflows of RM21.9 billion in 2018, while the equity market’s total outflows narrowed to RM11.1 billion from RM11.7 billion in the previous year,” it said.
In the bond market, it said non-residents accounted for 13.7 per cent of total outstanding ringgit bonds as at end-December 2019 compared with 13.1 per cent at end-2018, most of which were Malaysian Government Securities (MGS) at 80.1 per cent of total foreign holdings (end-2018: 79.1 per cent).
The SC said 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,” it said.
For the Malaysian equity market, the SC said overall market capitalisation ended the year marginally higher by 0.7 per cent to RM1.71 trillion in 2019 from RM1.70 trillion in 2018.
The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) declined six per cent y-o-y to close the year at 1,588.76 points versus a fall of 5.9 per cent y-o-y to 1,690.58 points in 2018.
The key index was influenced by a year of event-driven volatility in sentiments, as well as subdued corporate earnings, which continued to be a pressure point on the benchmark index, it said.
“Excluding the FBM KLCI components, the energy sector specifically recorded the largest increase, rising by 50.7 per cent y-o-y versus a decline of 17.3 per cent y-o-y in 2018, while the construction sector increased 47.9 per cent y-o-y versus a fall of 46.0 per cent y-o-y in 2018, owing partly to the revival of public projects by the government,” it said.
The SC said the technology sector rose by 37.5 per cent y-o-y compared with a contraction of 9.32 per cent y-o-y in 2018, benefitting from the 5G network rollout, higher global smartphone shipments, and potential trade diversion stemming from the ongoing US-China trade war. — Bernama
