Against a backdrop of a difficult market environment underscored by heightened risk aversion, the SC will focus on providing an efficient and facilitative platform for fund-raising and corporate restructuring while upholding high standards of disclosure and transparency.

“We must work closely together to meet these challenges head-on. All of us who have a stake in the Malaysian capital market must remain vigilant and prove ourselves equal to the task. There is no room for complacency,” she said.

At the same time, efforts will continue to be taken to strengthen the competitive positioning of Malaysia’s capital market in the regional landscape through structural reforms in the area of capacity building and intermediation efficiency.

Highlights of 2008
The Malaysian capital market sustained fund-raising activities in 2008 despite volatility in the markets. The SC approved 31 initial public offerings (IPOs) in 2008 compared to 26 in 2007. There were a total of 23 listings on Bursa Malaysia for 2008.

There were continued inflows into the investment management industry with assets managed by fund managers totaling RM223.5 billion in 2008, and a net inflow of RM21 billion into unit trusts. 86 new funds were launched. The net asset value of the unit trust industry now stands at 20.3% of market capitalisation (15.3% in 2007).

The Islamic capital market remains a core segment of the Malaysian capital market. Shariah compliant equities formed 64.2% of total market capitalization in 2008 (63.7% in 2007). The value of outstanding sukuk rose to RM211.0 billion from RM199.1 billion in 2007.

Effective fund-raising and intermediation
The SC’s proposal for the unified board seeks to combine the main and second boards and to re-position MESDAQ as sponsor-driven fund-raising platform for local and foreign companies in all sectors. Once the proposals are implemented later this year, they will provide issuers with greater access to the capital market, while at the same time, continue to protect investors’ interest through enhanced standards of disclosure and corporate governance.

In addition, various product initiatives are also being reviewed including the introduction of Special Purpose Acquisition Companies (SPACs) to promote private equity investments and facilitate mergers and acquisitions.

To create a more facilitative environment for the issuance of bonds and sukuk, the deemed approved process is now extended to all issuers rated AAA (local currency rating) or a minimum BBB (foreign currency rating) upon full submission of their proposals to the SC.

Our Islamic fund management industry is currently the largest in the world in terms of number of funds and second in terms of assets under management. Malaysia’s position as an Islamic finance hub has been enhanced with approvals granted to 8 leading players to set up operations in Malaysia. In terms of product diversification, Malaysia launched the region’s first Shariah-compliant Exchange Traded Fund.

Compliance, professionalism and governance
The SC strengthened supervisory oversight by stepping up monitoring of market intermediaries and conducting risk-focused examinations to evaluate the effectiveness of their controls. In addition efforts were focused on ensuring compliance with all prudential requirements and standards of conduct. Similarly, oversight of PLCs was strengthened through more frequent engagements and closer reviews of their compliance with financial reporting standards.

In addition, the SC released a number of new guidelines on ethical conduct and professional accountabilities aimed at enhancing market and self discipline among gatekeepers in the market, including guidelines for principal advisers in corporate proposals, as well as market conduct and business practices by market intermediaries.

The Audit Oversight Board, which will be in place this year, will promote an effective and robust audit oversight framework for Malaysia.

The SC continues to pursue a variety of enforcement actions when breaches of securities laws occur. These include criminal prosecution, civil action and administrative action.