Total funds raised via the equity and corporate bond markets amounted to RM130.9 billion, above the five-year pre-pandemic average of RM121.4 billion. Alternative financing grew by 149% in 2021, setting a new record. Equity crowdfunding (ECF) and peer-to-peer (P2P) financing continued to gain traction, raising RM1.4 billion for the Micro, Small and Medium Enterprises (MSMEs) (2020: RM640 million). Meanwhile, new venture capital (VC) and private equity (PE) investments rose to RM1.1 billion (2020: RM333.9 million).

Overall AUM grew to RM951.1 billion from RM905.5 billion in 2020, reflecting increases in most sources of clients’ funds under management. Net asset value (NAV) of unit trust funds, the largest contributor to AUM, rose to RM526.9 billion in 2021 (2020: RM519.5 billion).

Speaking to reporters at a virtual media conference, SC chairman Datuk Syed Zaid Albar said, “The Malaysian capital market remained resilient in the face of renewed market uncertainties last year. In 2021, the SC directed its efforts to ensure regulatory agility, promote sustainable development and define its priorities for the next five years.

“With our focus firmly on a post-pandemic future, the SC’s priorities in 2022 aim to shift the capital market to a relevant, efficient, diversified and inclusive ecosystem, allowing Malaysia’s national growth pillars to achieve our ambitions in areas such as digital, carbon-neutrality and managing the transition of our country into an aged-nation,” he added.

Ensuring Regulatory Agility 

The domestic capital market remained fair and orderly, with systemic risks adequately managed and contained. A significant number of public listed companies (PLCs) continued to benefit from the extended regulatory reliefs and additional flexibilities to help weather the impact of COVID-19. More than 280 PLCs also benefitted from waivers and rebates on listing related fees under the PEMERKASA strategic programme.

The SC also enhanced its market surveillance capabilities, including closer monitoring of corporate bonds (fixed income market) and takeover activities. Implementation of in-house digital forensics capabilities has seen improved productivity. The enhanced risk management framework, as well as the takeover surveillance framework had also improved the breadth and depth of SC’s surveillance capabilities. Regular supervisory assessments and thematic reviews were carried out to monitor compliance with conduct requirement, the liquidity position of market intermediaries and determine their ability to absorb redemption pressures.

To combat unlicensed activities with greater agility, an SC cross-divisional taskforce was established to investigate clone-firm scams. To date, the SC has undertaken five enforcement actions, 473 regulatory interventions and put up 275 unlicensed companies and individuals on the SC’s Investor Alert List.

In 2021, the enforcement strategy was focused on achieving swift, effective and targeted outcomes, with the SC deploying a wide range of enforcement tools. Through civil enforcement actions, the SC pursued restitution for investors with RM2.7 million restituted to 721 aggrieved investors, while a total of 136 administrative sanctions were taken on misconducts and less serious breaches of securities laws and guidelines.

The SC’s guidance on Self-Reporting in 2021 had paved the way in promoting stronger self-discipline amongst industry players by incentivising self-reporting and early rectification or containment of misconduct. As outlined in the CG Monitor 2021, the SC observed improved corporate governance adoption among PLCs, with adoption rates rising above 90%. Additionally, 691 PLCs reported having at least one woman director on the board. The 3-year Corporate Governance Strategic Priorities and updated Malaysian Code on Corporate Governance (MCCG) will set the tone for the development of environmental, social and governance (ESG) leadership, effective stewardship and driving CG excellence.

Promoting Sustainable Development

The SC continued to advance its development initiatives particularly in promoting the sustainability agenda, deepening the RM2.3 trillion Islamic capital market (ICM) and strengthening the SC’s position as a hub for sustainable and responsible investment (SRI).

The Shariah Screening Assessment Toolkit for MSMEs and the FIKRA Islamic Fintech Accelerator programme were two key initiatives introduced last year to advance Malaysia’s ICM. Unlisted MSMEs can now raise Shariah-compliant funds and investors now have access to alternative Islamic assets as well as investments that meet market-based and societal needs.

Measures to grow the domestic SRI ecosystem focused on enhancing awareness and appreciation of sustainability and facilitating green and SRI product offerings. Towards this end, the SC launched the NaviGate: Capital Market Green Financing Series, a programme to create greater awareness and connectivity between companies committed to sustainability and the capital market.

To provide standardisation and greater comparability in identifying sustainable economic activities, the SC released the consultation paper on the principles-based SRI Taxonomy for the Malaysian capital market. The SRI taxonomy aims to guide companies with transition finance needs, facilitate investment allocation and spur the growth of SRI assets. In terms of Islamic social finance, there was continued traction in waqf-featured funds, thus providing investors with an instrument to achieve both financial and socially-impactful outcomes.

Significant progress was made to broaden capital market access, expand investment options and increase the efficiency of the traditional markets. This includes expanding the categories of sophisticated investors to provide greater access to capital market products, promoting faster IPO time-to-market and revising the Guidelines on Unit Trust Funds to promote competitiveness and innovation in the unit trust industry.

A more efficient fundraising framework was put in place to meet the funding needs of high growth and small to mid-sized companies. In this regard, the approval and listing process for IPOs was consolidated, with Bursa Malaysia authorised as the one-stop centre for ACE Market listings effective 1 January 2022. Revisions were made to the special purpose acquisition company (SPAC) framework to broaden fund raising options for new ventures.

Initiatives introduced for the ECF market in 2021 had aided start-ups and MSMEs in raising early stage-financing in a flexible and competitive manner. This includes expanding the types of eligible issuers for ECF, as well as increasing ECF fundraising limits. Early-stage companies were also able to benefit from co-investment structures like Dana Penjana and MyCIF.

Charting the Future

To navigate emerging trends amidst the new normal, the SC had set the direction forward to future-proof the capital market and build a resilient future. The SC launched the Capital Market Masterplan 3 (CMP3) as a strategic framework for the growth of the capital market over the next five years. The SC’s priorities in 2022 aim towards achieving the CMP3’s desired outcomes of a relevant, efficient, diversified and inclusive capital market that will enable the Malaysian economy to emerge stronger.

The SC also issued the CG Strategic Priorities 2021-2023, which represents a step forward in advancing board leadership and embedding ESG considerations into domestic corporate practices. Initiatives under these priorities include embedding CG values and culture early amongst youths and SMEs, both critical backbones, for the future of the nation.

To expand the SC’s financial and investment literacy penetration beyond the Greater Klang Valley area, financial education and investor outreach programme initiatives will focus on the underserved segment and silver population through the ‘Agen Bijak Labur Desa’ and ‘Digital Clinics for Urban B40’, to narrow the digital divide and equip vulnerable investors with knowledge on investment risks and opportunities, and tools to identify scams.

In terms of the SC’s internal initiatives, Datuk Syed Zaid said, "From an organisation perspective, the SC will strengthen its internal digital capabilities and skills set to enable the SC’s workforce to harness state-of-the art digital technology for deeper insights and engender efficiency in our risk management, surveillance and supervision functions. The SC has also embarked on its own journey towards reducing its carbon and environmental footprint, in line with Malaysia’s goal of becoming a carbon-neutral

AOB Annual Report 2021 

The SC’s Audit Oversight Board (AOB) also released its Annual Report 2021 today. A total of 975 individual auditors and employees from smaller AOB-registered audit firms benefitted from capacity-building programmes led by AOB in collaboration with the Malaysian Institute of Certified Public Accountants (MICPA) last year. The programmes focused on addressing common areas of audit weaknesses noted by the AOB during its inspection of audit firms and auditors.

The AOB engaged 677 Audit Committee (AC) Members from 397 PLCs to reiterate the importance of their role in promoting the integrity and reliability of PLCs’ audited financial statements and to continue assessing the impact of the COVID-19 pandemic on the internal controls of the financial reporting function.

The AOB also implemented the Annual Transparency Report by audit firms, which saw eight firms disclosing information pertaining to their legal and governance structures, measures to uphold audit quality and manage risks, as well as the measurements of their audit quality indicators. The firms shared their Annual Transparency Report with the Audit Committees of their public interest entities clients.

In line with the SC’s sustainability efforts, the SC and AOB’s annual reports are digitally produced starting this year. To view and download these reports, please visit www.sc.com.my/annual-report-2021 and www.sc.com.my/annual-report-2021/audit-oversight.