M’sia continues to be an attractive investor destination
IN the first seven months of 2019, gross funds raised in the capital market increased 27.8% to Rm167.9bil mainly due to higher fundraising activity in the private sector which grew significantly by 47% to Rm89.2bil.
Gross funds raised by the private sector through domestic equity market edged up drastically from Rm0.9bil to Rm5bil.
Initial public offerings (IPOS) in the equity market rose from Rm600mil to Rm1.6bil while rights issuances increased from Rm300mil to Rm3.5bil.
Malaysia continues to cement its position as an attractive investment destination among local and foreign investors.
Meanwhile, funds raised through new corporate bond issuances increased 40.8% to Rm84.2bil in the first seven months of 2019.
The increase was reflected through higher new issuances of medium-term notes, accounting for 92.8% of total corporate bonds.
The bulk of funds were raised by the finance, insurance, real estate, and business services sector, accounting for 83.5% of new corporate bond issuances.
The funds that were raised were mainly used to finance infrastructure projects, business activities and working capital.
In the near term, fundraising in the capital market is expected to remain robust in 2020 driven by various strategic projects.
Gross funds raised by the public sector increased by 11.3% to Rm78.7bil during the first seven months of 2019.
The issuance of Malaysian Government Securities (MGS) expanded Rm38.8bil, while Malaysian Government Investment Issues
(MGII) increased Rm39.9bil.
The increase was due to continued buying interest among local institutional and foreign investors in Government securities.
As at the end of July 2019, foreign holdings of MGS and MGII stood at 38.3% and 4.4% respectively.
The improved foreign investors’ appetite for local bonds was spurred by the hunt for yield amid dovish sentiment.
As at the end of July 2019, yields of MGS and corporate bonds have declined across the entire maturity spectrum and rating bands in line with global bonds.
The downward trend was caused by
stronger foreign investors’ risk appetite for Malaysian fixed-income securities.
This was driven by active yield hunting following the overnight policy rate cut by Bank Negara and the dovish stance by the Federal Reserve.
Between January and July 2019, the 1-year, 3-year, 5-year and 10-year MGS yields declined within the range of 29 and 49 basis points.
In the corporate bond market, yields on the 5-year Aaa-rated, Aa-rated and A-rated securities dropped between 51 and 79 basis points, following the investor shift to safe-haven assets.