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KUALA LUMPUR, March 28 (Bernama) -- Malaysia’s capital market expanded 3.0 per cent to RM3.5 trillion last year on the back of a robust capital market regulatory infrastructure, diversified market ecosystem and market participants’ strong capitalisation levels and is expected to improve further in 2022, the Securities Commission Malaysia (SC) said.
Total funds raised in the capital market remained robust, rising to RM130.9 billion in 2021 (2020: RM114.6 billion), above the five-year pre-pandemic average of RM121.4 billion, of which RM16.6 billion was raised via the equity market, while RM114.3 billion was raised through the corporate bond market.
It said the capital market will remain resilient, orderly, and supportive of the economy, underpinned by strong macroeconomic fundamentals, ample domestic liquidity, and resilient capital market infrastructure despite the projected uneven domestic and global economy recovery.
“It will continue to be influenced by key global developments, with volatility likely to be driven by evolving geopolitical tensions, as well as the timing and pace of global monetary policy normalisation,” the SC said in its Annual Report 2021 released here, today.
SC chairman Datuk Syed Zaid Albar said that it will remain vigilant in navigating the year ahead as there remain several challenges which can potentially exacerbate market volatility and affect sentiment.
He said prospects for a better year for the Malaysian capital market are predicated on sustained domestic economic recovery, with the implementation of the Capital Market Masterplan 3 (CMP3) initiatives providing further impetus to market activities.
Technology to be a Key Driver
“Technology will continue to be a key driver for market growth and development. Internally, the SC’s technology roadmap will accelerate the adoption of machine learning capabilities and supervisory technology (SupTech) to enhance the effectiveness of our regulatory functions.
“However, as online tools and regulatory technology (RegTech) solutions gain acceptance within the industry, it is important to take cognisance of risks arising from the use of technology and cyber threats,” he said.
He said the capital market continued to play its critical roles in financing the economy and intermediating savings with notable increase in fundraising activities and encouraging growth of the overall fund management industry.
In the past year, he said the SC worked closely with Bursa Malaysia Bhd and key stakeholders to help businesses recover and rebuild from the economic impact of COVID-19.
“Various regulatory reliefs for the market and listed companies were extended while the SC adjusted its strategic priorities to ensure the capital market remains fair and orderly, and emerging risks are monitored effectively.
“We continue to advance our development initiatives, particularly in promoting the sustainability agenda, growing the Islamic capital market (ICM) and harnessing innovation,” he said.
Meanwhile, Syed Zaid said the SC’s adoption of an enhanced risk governance framework had strengthened the effectiveness of its oversight and monitoring of potential systemic risks.
He said the framework, which integrates conduct, technology, and cyber risks into existing risk assessments, allows for better detection of risks with market-wide implications.
“We will also continue with efforts to expand fundraising avenues for micro, small and medium enterprises (MSMEs), including facilitating access to the domestic corporate bond market. Such measures are essential to support a recovery in economic activities going forward,” he said.
In 2021, he said access to funding for MSMEs remained at the forefront of growth initiatives, which saw a total of RM2.7 billion been raised for more than 4,000 MSMEs since the introduction of equity crowdfunding (ECF) and peer-to-peer financing (P2P financing) platforms.
“Efforts over the past year include expanding the types of eligible issuers for ECF, as well as increasing ECF fundraising limits. The Shariah Screening Assessment Toolkit for the Unlisted MSMEs was also issued to assist them in undertaking Shariah-compliant financing,” he said.
At the same time, Syed Zaid said fundraising through the conventional equity and bond markets saw a marked increase to RM130.9 billion in 2021.
“The SC continued to enhance access for initial public offerings (IPOs) with Bursa Malaysia authorised as the one-stop centre for ACE Market listings effective Jan 1, 2022 and revisions made to the special purpose acquisition company (SPAC) framework.
“In response to growing investor preferences for diverse and alternative products, the SC widened the categories of sophisticated investors and increased the list of permissible investments for the RM526.9 billion unit trust industry,” he said.
On promoting financial well-being, Syed Zaid said the SC will be working closely with the industry to enhance the diversity of investment and retirement products, where the delivery and penetration of financial education and investor outreach programmes will be expanded beyond Kuala Lumpur and the main cities.
“The SC’s ‘Agen Bijak Labur Desa’ and ‘Digital Clinics for Urban B40’ will target vulnerable segments of the population, especially the rural communities, senior citizens and urban poor, to equip them with the knowledge of investment risks and opportunities and tools to identify scams,” he said.
To Drive Three Years Corporate Government Strategic Priorities
This year, Syed Zaid said resources will also be expanded to drive the implementation of the SC’s three-year Corporate Gorvenance (CG) Strategic Priorities.
He said this will includes close collaboration with the government and private sector in driving diversity on boards, enhancing sustainability disclosures and continuing programme with institutions of higher learning to inculcate good CG among the youth.
“I believe the CG landscape will be strengthened with the rollout of various Perkukuh Pelaburan Rakyat (PERKUKUH) corporate governance initiatives for government-linked investment companies (GLICs),” he said.
The SC, he said, will also roll out several initiatives to support industry adoption of sustainability considerations and disclosures, including the Sustainable and Responsible Investment (SRI) Taxonomy framework and guidance note on environmental, social and governance (ESG) risks for fund managers.
As businesses and capital markets start to rebuild, Syed Zaid said the height and steepness of recovery trajectory rest on collective effort, commitment, and collaboration.
“Co-operation and engagement with other regulators and law enforcement agencies within and outside Malaysia are equally important to ensure that the SC discharges its regulatory responsibilities effectively to maintain the integrity of the capital market,” he said.
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