Local capital market still resilient, expands to US$3.4 trillion

As a result of these focused plans and strategies, the domestic capital market remained relatively resilient and continued to chart strong growth, expanding from RM2.0 trillion at the start of 2011 to RM3.4 trillion at the end of 2020.

SC

KUALA LUMPUR: Under the Capital Market Masterplan 2 (CMP2), the domestic capital market remained relatively resilient and continued to chart strong growth, expanding to RM3.4 trillion at the end of 2020 from RM2 trillion at the start of 2011, despite periodic bouts of volatility during the period.

The CMP2 (2011-2020) focused on strategies that would expand the capital market further, with robust governance in place to ensure market stability and integrity.

The CMP1 (2001 - 2010) was aimed at building the foundation of the capital market.

“As a result of these focused plans and strategies, the domestic capital market remained relatively resilient and continued to chart strong growth, expanding from RM2.0 trillion at the start of 2011 to RM3.4 trillion at the end of 2020,” the Securities Commission (SC) said in the Capital Market Masterplan 3 (CMP3) (2021 - 2025) launched here yesterday.

The resilience and growth resulted out of focused plan and strategies that would expand the capital market further, with robust governance in place to ensure market stability and integrity, said SC.

Among others, the introduction of various strategic initiatives helped to improve the depth, accessibility, and efficiency of the capital market, it said.

In response to the varied funding needs across the maturity lifecycle of businesses as well as changing investment preferences and appetites, Malaysia has seen continued expansion in the role of its capital market.

It is to be noted that Malaysia was among the first few countries in the region to introduce new fundraising alternatives to cater to businesses at various stages of growth.

This includes the introduction of equity crowdfunding (ECF) and peer-to-peer financing (P2P financing) for working capital needs of small businesses, and more recently, initial exchange offerings (IEO) for earlystage entrepreneurs.

In addition, onshore venture capital (VC) fundraising for early stage companies has evolved, with more investments into growth-stage companies. Similarly, onshore private equity (PE) fundraising for growth-stage companies has also increased.

Today, Malaysia comes second in PE deal volume in Asean4.

Alternative fundraising saw early success, spurred on by a broad range of development efforts, such as the launch of a publicprivate co-investment structure - the Malaysia CoInvestment Fund (MyCIF) – and the facilitation of alternative intermediation platforms.

While still small in size, these alternative fundraising avenues have become a growing source of financing for micro, small and medium enterprises (MSMEs) throughout the pandemic, increasing their reach to small and emergent companies by fourfold since inception.

The corporate bonds and sukuk market continued to be a strong fundraising avenue over the last decade, with the outstanding amount growing by 8.9 per cent compounded annual growth rate (CAGR) to RM732.4 billion in 2020. Share of corporate bonds and sukuk over total issuances increased to 28.5 per cent from 13 per cent in 2010.

The evolution of the investment needs of Malaysian investors generated significant growth in the industry’s assets under management (AUM) and brought changes to the Malaysian investment landscape, including greater diversity in product range and better intermediation capacity.

As a result, AUM grew at a compounded pace of 9.1 per cent per annum to RM905.5 billion in 2020 from RM377.5 billion in 2010.

In addition, the introduction of the private retirement scheme (PRS) provided individuals with a private option to complement the public mandatory retirement scheme and longer-term savings flexibility. Since the inception of PRS in 2012, its AUM had grown by a CAGR of 71.5 per cent to RM4.7 billion in 2020 from RM62.7 million in 2012.

Over the decade, Malaysia also continued to be a prominent global Islamic Capital Market (ICM) hub and a leader in global sukuk outstanding and issuances in 2020. Shariah-compliant assets amounted to RM2.3 trillion as of the end of 2020, having grown from RM1.1 trillion in 2010.

Malaysian sukuk outstanding more than tripled in size on the back of facilitative development policies.

Islamic AUM, meanwhile, grew 2.7 times, underpinned by initiatives outlined in SC’s Islamic Fund and Wealth Management Blueprint, which was launched in 2017.

A lot of work also went into enhancing market integrity and investor protection, strengthening oversight of systemic risk and the expansion of regulatory framework, in line with the evolving market. — Bernama