Malaysian Capital Market Stays Resilient, Posts 5.6% Growth in 2023

SC Releases Annual Report 2023, AOB Annual Report 2023 and Capital Market Stability Review 2023

MEDIA RELEASE

Kuala Lumpur, 25 March 2024

The Malaysian capital market remained resilient in 2023, with the size of the market growing by 5.6% to RM3.8 trillion (2022: RM3.6 trillion), driven by the growth in total equity market capitalisation and bonds and sukuk outstanding.

The Securities Commission Malaysia (SC), in its Annual Report 2023 released today, said the fund management industry also grew strongly with total assets under management (AUM) hitting a new high of RM975.5 billion (2022: RM906.5 billion) due largely to positive valuation effect.

The SC also released the Audit Oversight Board Annual Report 2023 (AOB Report 2023), and the Capital Market Stability Review 2023 (CMSR 2023).

The SC Chairman, Dato' Seri Dr. Awang Adek Hussin said the strong capital market performance was achieved despite global economic challenges and diverging expectations of monetary policies in major economies.

“2023 also holds special significance as it marks SC’s 30th anniversary, a major milestone that underscores the growing maturity and resilience of the institution,” he said.

“The SC remains unwavering in our resolve to strengthen our regulatory framework and uphold market integrity, not least because we continue to be measured against global regulatory standards,” he added.

Annual Report 2023

Among the key highlights of the Annual Report 2023 are:

Fund raising in the equity and corporate bond market moderated to RM127.7 billion (2022: RM179.4 billion) following decline in:

corporate bond and sukuk issuance to RM118.3 billion (2022: RM153.3 billion) due to lower refinancing demand; and
secondary equity fund raising to RM5.8 billion (2022: RM22.6 billion), returning to pre-pandemic levels.

IPOs improved to RM3.6 billion (2022: RM3.5 billion)
Alternative financing activities posted an encouraging growth and continued to support the funding needs of Micro, Small and Medium Enterprises (MSMEs), with total funds raised amounting to RM3.8 billion (2022: RM3.0 billion).
Equity crowdfunding (ECF) and peer-to-peer financing (P2P) platforms have allowed over 15,000 MSMEs to raise more than RM6 billion since inception.
Although the benchmark FBM KLCI declined by 2.7%, other market indices ended positively in 2023, reflecting investors’ interest in firms with higher growth potential, particularly Mid- and Small-Cap segments. Currently, the domestic equity market is among the best performing market in the region, with the FBM KLCI gaining almost 7.0% as of 12 March.
The Malaysian Islamic capital market (ICM) grew 4.5% to RM2.4 trillion in 2023, with sukuk outstanding growing by 7.4% and Shariah-compliant equities by 1.5%. To strengthen the competitive advantage of the ICM and bolster its societal and economic impact, the SC has issued the Maqasid Al-Shariah Guidance. This is the first time such guidance has been used in the capital market.
In 2023, the SC secured five criminal convictions and RM8.7 million in fines, along with RM4.8 million civil penalties imposed by the Courts. The SC also disgorged RM13.8 million pursuant to regulatory settlements entered into with 6 persons in separate cases. Additionally, 140 administrative sanctions were imposed. This resulted in the SC imposing fines and penalties amounting to RM19.5 million.
To enhance surveillance and supervision capabilities, the SC has developed the PLC360, an AI-powered tool for more robust oversight of PLCs, which will help in predicting the likelihood of misconduct, providing insights, detecting risk areas, and identifying emerging trends and concerns. This tool was developed internally and will provide a comprehensive overview of each PLC and auditor.
The SC continues to maintain a strong focus on promoting good corporate governance (CG). In the ACGA Corporate Governance Watch 2023, the SC maintained its 5th position among 12 Asia-Pacific markets. Additionally, women’s participation on boards of PLCs and intermediaries has improved, with women now holding 30.7% of board positions, meeting the 30% target set in the Malaysian Code on CG.
The SC received 3,262 complaints and enquiries on scams and unlicensed activities in 2023, a three-fold increase over the last five years from 2019 to 2023. It has also stepped-up efforts to protect investors and combat scams by establishing an internal Task Force to coordinate anti-scam interventions, enhancing the Investor Alert List page, and developing tools like the Investment Checker and Scam Meter for investors.
Key initiatives for the public markets include the introduction of an accelerated transfer process from the ACE Market to the Main Market, facilitated reduction of stamp duty for share trading on Bursa to lower costs for retail investors and fractional share trading to improve access to the stock market.
In its efforts to continue to improve its gatekeeping function, the SC streamlined its processes. This included introducing the Focus Scope Assessment (FSA) for eligible Capital Market Intermediaries (CMI) and Recognised Market Operators (RMOs), reducing time-to-market to three months from six months.
Additionally, in collaboration with Bursa Malaysia, IPO approvals for the Main Market and ACE Market were expedited to a three-month period for new applications received from 1 March this year.
To address demand for reliable and comparable sustainability information, the inter-agency Advisory Committee on Sustainability Reporting (ACSR) in which the SC chairs, was established to develop the National Sustainability Reporting Framework. The public consultation to seek feedback on the proposed use of the sustainability disclosure standards issued by the International Sustainability Standards Board and an assurance framework, is currently ongoing.
To ensure the competitiveness of MSMEs through the adoption of sustainability practices, we also published the simplified ESG Disclosure Guide to guide SMEs in making necessary the disclosures for exports.

The Annual Report 2023 includes three Special Articles that emphasise the SC’s work in investor protection, strengthening the competitive edge of the Islamic capital market, and capital market talent development. They are:

Special Feature 1: Towards Greater Protection of Investors
The article highlights the surge in scams and unlicensed activities reported to the SC in 2023 and how the SC is tackling these threats with an emphasis on proactive measures and collaborative interventions.

Special Feature 2: Maqasid Al-Shariah Guidance Islamic Capital Market Malaysia
In October 2023, the SC introduced the principles-based Maqasid Al-Shariah Guidance Islamic Capital Market Malaysia to strengthen the ICM ecosystem and align with Islamic finance principles. By aligning more closely with maqasid al-shariah, the ICM seeks to foster an ecosystem that is inclusive and conducive for products and services.

Special Feature 3: Capital market talent development programme investED
Through investED, the SC aims to address the talent shortage in the capital market by developing a sustainable pool of skilled talent and creating greater awareness of the capital market industry among Malaysian graduates.

AOB Report 2023

Among the key highlights of the AOB Report 2023 are:

For three consecutive assessments, Malaysia ranked first in the ACGA CG Watch, including in 2023, for the Auditors and Audit Regulators category.
In the latest update, 34 new individuals and 1 new firm were registered, while 1 individual was recognised.
Currently, there are 374 Registered Individual auditors in 41 Registered and recognised audit firms. These auditors were involved in auditing 1,256 PIEs with RM1.77 trillion PLC market capitalisation, and audits of 1,339 schedule funds with RM696 billion Net Asset Value.

CMSR 2023

The Capital Market Stability Review (CMSR), in its 2023 report, said the Malaysian capital market operated orderly in 2023 without any observed systemic stability concerns. Highlights of the CMSR include:

Stockbrokers and investment banks remained resilient and have sufficient capital buffers to manage their respective liquidity positions prudently.
PLCs posted higher earnings, mainly attributed to transport and financial services sectors.

Looking Ahead

Moving forward, the SC remains committed to advancing Malaysia’s capital market and supporting its transition towards a low-carbon economy.

The SC is looking to refine the SRI Taxonomy and develop the National Sustainability Reporting Framework to guide industry participants towards aligning with global sustainability standards.

The SC is also conducting a comprehensive review of the Capital Market Services Act 2007 (CMSA) and the Securities Commission Malaysia Act 1993 (SCMA) to ensure their relevance and in keeping up with the changes in the market.

The SC will also soon launch a 5-year MSME Roadmap, which aims to provide increased access to the capital market for MSMEs.

The SC will continue to enhance investor protection. This involves rigorous surveillance against unlicensed activities. In addition, the SC is also reviewing the regulatory framework governing fund raising by Unlisted Public Companies (UPCs).

To combat the risk of money laundering and terrorism financing, the SC continues to step up efforts in our supervision and industry controls to ensure regulatory effectiveness of our AML regime, and support the preparation of the Financial Action Task Force Mutual Evaluation in 2025.

The SC-led capital market talent development programme, investED, which was launched by the Prime Minister in June 2023, enters its second year, with the first cohort graduating this May. The programme has made significant progress, exceeding all its KPIs since its launch.

To view these reports, please visit:

Securities Commission Malaysia