SC: Capital market totals RM2.84 trillion by end of 2016

KUALA LUMPUR: The Malaysian capital market grew to RM2.84 trillion at end-2016, amid prevailing uncertainties and cautious investor sentiment, the Securities Commission (SC) said.

Despite subdued global fundraising, the capital market saw total fundraising of RM98.5 billion, primary market issuances of RM86.7 billion, corporate bond and sukuk market was raised to RM85.7 billion.

It said approximately RM1 billion was raised via new equity listings with 11 initial public offerings and one reverse takeover.

“There were seven companies which sought listing on the Main Market with the remaining on the ACE Market.

“In addition, RM11.8 billion of equity fundraising was raised via secondary market,” SC said in its 2016 Annual Report released yesterday.

The fund management industry maintained its upward growth trajectory in 2016, whereby total asset under management increased 4.3 per cent to RM696.3 billion in Dec 2016 from RM667.9 million in Dec 2015, supported by among others, an expansion of the unit trust industry.

As for the stock market, the year ended with a market capitalisation of RM1.67 trillion.

SC also said event-driven fluctuations, such as a possible September US Federal (Fed) Reserve rate hike, post-Brexit, improving oil prices and depreciation of the ringgit, resulted in shifts in foreign investing positions throughout the year.

“From a peak of +RM6.4 billion in April, foreign investors swapped to a more conservative investing position and registered net outflow at the end of the year amounting to RM3.2 billion.

“It is noteworthy that foreign portfolio outflow in 2016 moderated relative to the amount of RM19.7 billion in 2015.

“Institutional investors cushioned foreign equity outflows with net buying of RM3.1 billion for the year, with the remaining taken up by retail investors,” it said.

Meanwhile, the Malaysian bond market grew 4.5 per cent to close at RM1.17 trillion at end-2016 from RM1.12 trillion in 2015.

The bond market opened on a positive note as Bank Negara Malaysia (BNM)’s move to cut the statutory reserve requirement saw bond yields fall, particularly the 10-year Malaysian Government Securities (MGS).

“Amid lower expectations of a rate hike and an unexpected policy rate cut by BNM at the start of the third quarter, the bond market saw increased buying interest and a fall in yields across all tenors.

“However, this downward trend in yields was reversed amid a global bond sell-off in November over expectations of reflation of the US economy and the subsequent Fed rate hike at year-end,” said the report.

The SC said a notable differentiation of investors’™ preference for yields on shorter papers was observed while the impact of tighter US monetary policy was priced into MGS instruments with longer maturities.

Against a stronger US dollar and higher US treasury rates, foreign holdings in domestic bonds eased in line with regional peers in the fourth quarter.

“Notwithstanding the selldown towards the end of the year, total foreign ownership of domestic bonds increased by 0.4 per cent to RM215.6 billion in December 2016 from RM214.8 billion in 2015.

“Foreign ownership accounted for 18.4 per cent of total bonds outstanding while foreign holdings in MGS remained fairly stable, representing 47.1 per cent of total MGS outstanding at end-December 2016, reflecting investors’ long-term positive outlook on Malaysia,” it added.