“Despite global uncertainties and episodes of pronounced volatility affecting markets, the Malaysian capital market remained resilient with orderly market conditions. The market recorded growth across several market segments with favourable investor interest and provided sustainable long term financing for issuers,” said Tan Sri Ranjit Ajit Singh, Chairman, Securities Commission Malaysia.
Tan Sri Ranjit also highlighted that the outlook for the capital market in 2017 reflects increased optimism, underpinned by renewed interest in emerging markets and sustained domestic GDP growth expectations.
“We expect higher levels of fundraising in 2017, with current estimates of between RM102 to RM105 billion while at present, the size of the capital market has also increased to RM2.97 trillion,” he added.
Capital Market in 2016In 2016, RM86.7 billion was raised through the primary market, with corporate sukuk and bond issuances of RM85.7 billion and new equity listings of RM1.0 billion. In addition, RM11.8 billion was raised through the secondary equity market.
The bond market grew to RM1.17 trillion, while equity market capitalisation ended the year at RM1.67 trillion.
The fund management industry continued its upward trajectory, with assets under management (AUM) growing 4.3% from RM667.9 billion in 2015 to RM696.3 billion last year. Unit trust funds maintained overall net sales over redemption of RM26.0 billion, registering an increase of 3.4% to reach RM358.5 billion in net asset value (NAV).
Size of the Islamic capital market totaled RM1.69 trillion, representing 60% of the domestic capital market. Corporate sukuk outstanding increased by 8.9% to RM393.5 billion, while corporate sukuk issuances represented 75.7% of total corporate sukuk and bond issuances. Islamic fund management grew 13% to RM149.6 billion in AUM, primarily driven by expansion of Islamic unit trust funds.
Private Retirement Schemes (PRS) registered an NAV of RM1.5 billion and saw increase in total membership to 221,000 individuals.
Enhancing Market Efficiency SC continues to pursue its multi-year regulatory reform agenda to facilitate greater market efficiency and regulatory flexibility. Since 2014, a wide range of gradual liberalisation efforts were introduced in key segments including the wholesale market, unit trust, venture capital and private equity industry.
In 2016, SC introduced an expedited approval process for non-complex unit trust funds to reduce time-to-market, enhancing competitiveness and efficiency of the unit trust industry.
SC also launched a rule book on the revised Takeovers and Mergers Framework to facilitate market flexibility to spur merger and acquisition activities. SC has expanded the scope of permitted activities under the REITs Guidelines and reviewed the Principal Adviser Guidelines to further drive competitiveness and efficiency of the market.
Safeguarding Market Integrity SC’s supervision and surveillance efforts continue to focus on reinforcing high standards of market conduct and ensuring firms put the interests of investors at the centre of their businesses. To this end, the SC carried out thematic assessments on governance, sale practices, third-party receipts and propriety trading. In addition, continued surveillance of market and corporate activities allowed for timely detection of market irregularities and pre-emptive actions.
SC deploys a wide range of enforcement tools to preserve market integrity through credible deterrence. In 2016, SC took a total of 58 enforcement actions, including criminal prosecutions and civil actions. A total of 17 individuals were charged with various offences, including 10 for insider trading, 4 for causing wrongful loss to the company and 3 for failing to register a prospectus with the SC in relation to the issuance of shares.
In addition, the SC restituted 423 investors with the sum of approximately RM1.8 million which constituted sums disgorged through civil enforcement actions.
Swift administrative sanctions are also used to address regulatory breaches. In 2016, SC imposed 37 sanctions for making false or misleading statements to the SC, breaches of licensing conditions and late submission of documents.
SC believes that the best form of investor protection is ultimately the empowerment and education of investors to enable informed investment decision-making. In this regard, the SC has established a Consumer and Investor Office with a wider scope to focus on the delivery of targeted and research-based investment literacy and outreach programmes. The continuing InvestSmart education programme has meanwhile reached over 28,000 individuals across the country.
Maintaining systemic resilience SC’s oversight of the capital market, which includes market infrastructure as well as key institutions and intermediaries also focused on ensuring systemic stability. Amidst global uncertainties, more in-depth risk analysis was conducted on market conditions, liquidity and price adjustments.
Against a backdrop of escalating levels of cyber risk globally, the SC released the Guidelines on Management of Cyber Risks to strengthen and prepare the Malaysian capital market against potential cyber threats and security breaches.
Facilitating Market InclusivenessSC continues to drive developmental initiatives towards deepening market segments and identifying new growth drivers.
To facilitate wider accessibility to market-based financing, SC crafted a holistic digital markets strategy. In 2015, Malaysia became the first in the region to introduce Equity Crowdfunding Framework (ECF), and in less than a year since, 14 issuers collectively raised a total of RM10.4 million through the six SC-registered ECF platforms.
In 2016, SC introduced the peer-to-peer (P2P) financing framework to further broaden financing avenues for micro, small and medium enterprises. Six P2P operators were registered and are expected to be fully operational in 2017.
Leveraging Malaysia’s well-developed Islamic finance ecosystem, SC undertook initiatives to enhance the country’s competitive position, with particular focus on Islamic fund and wealth management (IFWM). In this regard, the IFWM Blueprint was developed to chart the medium and long-term strategic direction to enhance international connectivity and develop capabilities of Malaysia’s service providers and intermediaries.
The SC continues to focus on enhancing the vibrancy of key market segments, including exchange traded funds, mid-cap PLCs and VC/PE. Dedicated taskforces comprising industry and other stakeholders were set up to develop strategic recommendations to spur further growth in these areas.
Moving ForwardIn 2017, the SC will continue to develop and strengthen the positioning of key market segments while reinforcing market conduct and governance. Key initiatives include:
- Operationalisation of Islamic Fund and Wealth Management Blueprint, including issuing framework for SRI investment funds and setting up global capacity building centre for Islamic capital market
- Issuance of Digital Investment Management Framework
- Implementation of key recommendations to drive growth for ETF, mid-cap PLCs and VC/PE segments
- Introduction of revised Malaysian Code on Corporate Governance and establishment of Institute of Corporate Directors Malaysia
- Issuance of revised Principal Adviser Guidelines and new Licensing and Conduct Handbook
- Talent development and capacity building through the implementation of Capital Market Professional Qualification (CMPQ) programme
