KUALA LUMPUR: The Ministry of Finance (MOF) expects Malaysia’s capital markets to remain resilient and supportive of the economy, buoyed by strong macroeconomic fundamentals, high domestic liquidity, and a well-developed infrastructure.
In its Economic Outlook 2024 report released today, the ministry said the Capital Market Masterplan 3 (CMP3) is set to make capital markets more relevant to economic development and its stakeholders by 2025.
“The goal is to achieve an efficient and effective capital market that channels capital into productive sectors as well as fostering diversity and competition.
“Towards this end, the Securities Commission Malaysia (SC) continues to focus its efforts on raising domestic investors’ digital savviness and positioning fintech to promote solutions in the halal economy, sustainable and responsible investment (SRI), and Islamic social finance,” the ministry said.
It said the launch of the National Energy Transition Roadmap (NETR), New Industrial Master Plan 2030 (NIMP 2030) and the 12th Malaysia Plan (12MP) mid-term review (MTR), guided by the Madani economy framework, are among the policies that will advance Malaysia.
“Along with the government announcement on measures to revitalise the capital space, the domestic financial market is poised to strengthen further and contribute more significantly towards the country’s wealth and prosperity,” it noted.
MOF said as a result, the Islamic capital market continued to lead the country’s fundraising and investing, with a size of RM2.4 trillion as of the end of July, accounting for 64.4 per cent of the total capital market size in Malaysia, driven by sukuk issuances.
For the seven-month period of 2023, total gross funds raised by capital markets jumped 11.4 per cent to RM184.1 billion amid increased fundraising activities, with the public sector fundraising expanding by 10.8 per cent to RM114 billion and the private sector by 12.4 per cent to RM70.1 billion.
The private sector’s gross funds raised via new corporate bonds grew by 11.8 per cent to RM67.1 billion, primarily via medium-term notes (RM65.3 billion), straight funds (RM1 billion) and Islamic bonds (RM865.6 million).
Sukuk issuances amounted to RM178.2 billion from January to July, with Malaysia continuing to record the largest share of global outstanding sukuk at 38.8 per cent.
Equity market
The funds raised via the domestic equity market during the period amounted to RM2.9 billion, driven by the initial public offering (IPO) under both the Main and ACE markets.
As of the end of July, the market capitalisation of shariah-compliant securities stood at RM1.11 trillion or 65.1 per cent of the overall total market capitalisation of Bursa Malaysia.
MOF said Malaysian Government Securities (MGS) issuances widened by 8.3 per cent to RM57.4 billion, while Malaysian Government Investment Issues (MGII) increased by 13.5 per cent to RM56.6 billion.
MGS and corporate bond yields during the seven-month period declined broadly with one-year, three-year, five-year and 10-year MGS down by two basis points (bps), 18 bps, 26 bps and 26 bps respectively, due to expectations of monetary policy reaching its peak.
The corporate bond yields for the five-year AAA-rated, AA-rated and A-rated securities decreased by 42 bps, 42 bps and 10 bps respectively, but BBB-rated yield went up by 21 bps during the same period as investors sought bonds with relatively safer credit ratings in light of risk-off sentiment due to US banking distress.
Overall, the outlook for MGS, MGII as well as corporate bonds and sukuk remain positive amid anticipation of the conclusion of Bank Negara Malaysia’s (BNM) rate hiking cycle this year.
MOF said Bursa Malaysia continued to be affected by external challenges during the eight months of this year due to uncertainties surrounding global economic growth.
The FTSE Bursa Malaysia KLCI (FBM KLCI) index slipped below the 1,400 psychological level to 1,387.12 points at the end of May, before subsequently improving to 1,451.94 at the end of August.
The accumulated net equity inflows for July and August stood at RM1.55 billion.
There are at present 773 Main Market companies, 167 ACE Market companies and 48 LEAP-listed firms on Bursa Malaysia. -Bernama
