SC: Capital raising to top RM100b this year
> Expected to be driven mainly by corporate bond and sukuk issues for infrastructure financing
KUALA LUMPUR: The Securities Commission Malaysia (SC) expects capital raising for 2017 to be higher at RM102 billion to RM105 billion, compared with RM98.5 billion in 2016.
The RM98.5 billion achieved last year was 9.4% higher than the RM90 billion seen in 2015.
Speaking to reporters at a media briefing on the SC’s annual report for 2016, chairman Tan Sri Ranjit Ajit Singh said he is optimistic on the outlook for the capital market, which will be mainly driven by capital-raising activities in the corporate bond and sukuk market for infrastructure financing as well as the refinancing of bonds and sukuk. The amount to be raised from the bond market is projected to be RM85 billion.
He also foresees equity fundraising for 2017 to be higher, with RM7 billion to RM9 billion via initial public offerings (IPOs) and RM10 billion to RM11 billion through the secondary market.
In 2016, a total of RM86.7 billion was raised via the primary market, with corporate sukuk and bond issuances of RM85.7 billion and new equity listings of RM1 billion, and RM11.8 billion more through the secondary equity market.
Ranjit said his optimism is underpinned by sustained gross domestic product growth expectations domestically and renewed interest in the emerging markets.
“The improvement in market sentiment will provide an impetus for companies to tap both the primary and secondary equity markets to raise funds as they gain the confidence to make investments,” he said.
Ranjit noted that there are no immediate systemic risk concerns, especially from global geopolitical events, while contagion effects from monetary policies in the advanced markets are being closely monitored.
Despite the uncertainties on the external front, he believes Malaysia will be able to withstand the volatility with the strong capital market.
“We’ve been focusing on building a resilient and diversified capital market and we’ve strong institutional liquidity. So even if there is an outflow, the market is still resilient.
“The market can assure that the economy and companies continue to (have access to financing), that’s why we can achieve RM98.5 billion even in an uncertain economy,” Ranjit explained.
The Malaysian capital market grew to RM2.84 trillion in 2016 and has expanded to RM2.97 trillion as at March this year. The Islamic capital market, which registered RM1.69 trillion, accounted for 60% of the domestic capital market.
Foreign equity portfolio outflow moderated to RM3.2 billion in 2016 versus RM19.7 billion in 2015, with total foreign holding in the equity market between 22% and 24%.
Over the fund management industry, there was a 4.3% growth in assets under management from RM667.8 billion in 2015 to RM696.3 billion in the year before.
Private retirement schemes recorded a net asset value of RM1.5 billion with total members of 221,000.
On another note, the SC is working on measures to drive the growth of the exchange-traded fund (ETF) segment, including incentivising issuers and investors to participate in the ETF market, broadening investors’ understanding of ETFs as well as facilitating the ecosystem for the ETF market.
The commission’s managing director of development and Islamic markets, Zainal Izlan Zainal Abidin, said the task force is looking at different aspects to enhance the vibrancy of the ETF market.
“We’ll broaden the range of ETP products to be offered in Malaysia. The approach is to have a holistic set of recommendations to address various parts of the ETF ecosystem in Malaysia,” he added.