Malaysian capital market has built trust, confidence — SC chairman

KUALA LUMPUR: The Malaysian capital market has built trust and confidence as seen from the scale of fund mobilisation in businesses and savings by investors, said Securities Commission Malaysia (SC) Executive Chairman Tan Sri Ranjit Ajit Singh.

He said the opportunity for investors to realise returns in the capital market remained the key elements in market performance.

“Investors, who perceived themselves to be disadvantaged, will reduce exposure, whereby reduced investor participation in the market will affect and lead to lower credibility, therefore, cause higher cost of raising capital.

“It is around trust and confidence in how the market operate. The fact that we have the trust and confidence allow us to raise funds,” he said during the MIA final 50th Commemorative Lecture series here on Monday.

Ranjit said the size of Malaysia’s capital market today was about RM3.1 trillion, three times the Gross Domestic Product, witnessing a healthy level of fundraising over the past five years with an average of RM116 billion raised annually.

This has enabled the capital market to play an active role in supporting business activities and the real economy, including infrastructure development, he said.

Similarly, Ranjit said savings mobilisation grew significantly with Malaysia’ s strong fund management industry having established itself over the years with assets under management at RM750 billion in the first half of 2017. He said this is one of the fastest growing segments of the capital market, expanding 15.8 per cent per annum over the last 10 years from RM161 billion.

The unit trust industry has also experienced a significant increase in net asset value from RM122 billion in 2006 to RM409 billion at the end of June 2017 whereby these private fund managers, together with public institutional investors, make up in excess of RM1.3 trillion worth of assets, he said.

He added that the SC recognised that building trust and confidence would always remain one of its core efforts and demands for robust market infrastructures and a regulatory architecture that enabled transactions to occur fairly, orderly and in a transparent manner, where investors were protected.

Meanwhile, Malaysian Institute of Accountants President Salihin Abang said the capital market was built on trust, driven by accurate and reliable financial information which relied on the practices of professional accountants.

Accountants and finance professional are the key pillars in organisation and front runners when it comes to safeguarding the integrity of financial reporting which is crucial for investors to make informed decisions, he said.

Trust is the social capital of accounting professionals which in turn creates stakeholders’ trust in the regulations of the capital market, he said, adding that, “Trust is something that is difficult to establish and is very fragile, thus needs to be taken care of.