M'sia's RM3.6 trillion capital market remained resilient in 2022
27 Mar 2023 01:19pm
Securities Commission (SC) chairman Datuk Seri Dr Awang Adek Hussin said, in fact, the total funds raised of RM179.4 billion is the highest ever, led by a record amount of corporate bond and sukuk issuances, while exchange-traded derivatives also registered a record volume of 18.8 million lots traded.
Securities Commission (SC) chairman Datuk Seri Dr Awang Adek Hussin said, in fact, the total funds raised of RM179.4 billion is the highest ever, led by a record amount of corporate bond and sukuk issuances, while exchange-traded derivatives also registered a record volume of 18.8 million lots traded.
However, he said the overall weaker valuations resulted in a dip of assets under management to RM906.5 billion.
"These contrasting observations highlight the delicate balance between pursuing growth and adopting prudence in the face of uncertainties.
"Continued trust and confidence in Malaysia’s fundraising and investment environment depends on how these elements are managed by market stakeholders," said Awang Adek in the Chairman's Message in the SC Annual Report 2022 released today.
He said the continued resiliency of the Malaysian capital market highlights the value of exercising prudence and shared accountability as this approach allows the market to better manage risks, preserves overall financial resilience and stability, and supports economic growth.
"It entails undertaking continuous surveillance and supervisory audits as well as thematic assessments on licensed intermediaries and institutions to ensure the robustness of market infrastructure and industry processes.
"Where necessary, additional guidance is provided for emerging risks including managing environmental, social and governance risks for fund management companies," he said.
Awang Adek said the domestic institutional fund practices were strengthened in 2022 with the release of good governance principles for government-linked investment companies, in line with national objectives, and an updated Malaysian Code for Institutional Investors 2022.
Public-listed companies will also be expected to account for their sustainability risks under Bursa Malaysia’s Enhanced Sustainability Reporting Framework for Listed Issuers.
"The SC will remain vigilant and take tough actions to address market misconduct or manipulation. During the year, our enforcement actions covered insider trading, issuance of false statements and unlicensed activities, among others," he added.
As policymakers, it is also essential for the SC to foster such conditions by ensuring its regulatory frameworks are aligned with the fast-changing landscape.
Among key development highlights in 2022 are the release of the Sustainable and Responsible Investment (SRI)-Linked Sukuk Framework and Principles-Based SRI Taxonomy for the Malaysian Capital Market to spur the corporate transition to a greener and more sustainable future.
He said an enhanced venture capital and private equity guidelines to increase the vibrancy and accessibility of private markets for Micro, Small and Medium Enterprises (MSME) also took effect in the second half of the year.
In addition, the regulator issued investment advisory guidelines to expand the profession’s diversity and quality, with a technical note on digital investment advice to address new delivery platforms.
In October 2022, the SC announced digital-related initiatives for the capital market, including permitting new equity crowdfunding (ECF) and peer-to-peer (P2P) financing platforms with unique value propositions, as well as opening up to more digital asset exchanges.
Moving forward, Awang Adek said 2023 is anticipated to be challenging but the SC remains committed to building a relevant, efficient and diversified capital market.
"This entails measures to future-proof the underlying market infrastructure and strengthen our thought leadership role, while enhancing market breadth and depth as well as technology adoption," he said.
The regulatory body also intend to modernise two key regulatory pillars - the Capital Markets and Services Act 2007 and the Securities Commission Malaysia Act 1993.
It will provide the basis for a future-ready Malaysian capital market, and the SC will be working closely with industry stakeholders to operationalise the Capital Market Graduate Programme to nurture and retain prospective talent, he said.
In advancing the sustainability agenda, he said the SC will work closely with government ministries, agencies, and other stakeholders to shape a country-level plan, including developing a supportive ecosystem for sustainability disclosures.
There is also a great deal of potential to be unlocked in the Islamic capital market (ICM) via innovative product offerings that facilitate sustainable as well as socially beneficial outcomes, he added.
"Given Malaysia’s position as a leading Islamic thought leadership jurisdiction, it is essential to demonstrate the value of Shariah objectives in enhancing sustainability practices.
"We are in the process of shaping a comprehensive set of Maqasid al-Shariah principles to provide a guiding pathway for further growth of the ICM, and the stakeholder consultations on this will begin in late 2023."
Awang Adek said the growing private market segment will be essential for future nation-building, particularly in channelling risk capital to support MSME growth.
Therefore, measures to strengthen the alternative fundraising ecosystem to facilitate larger fundraising amounts and build specialised capacity and capabilities will be initiated.
The entry of new ECF and P2P platforms in 2023 is expected to enhance the diversity of alternative fundraising products and services.
"In terms of the public market, we will be working with Bursa Malaysia to facilitate the transfer of eligible companies from the LEAP Market to the ACE Market," he said.
The SC also intends to review its digital assets strategy with a view to reinforce this segment’s proposition and direction moving forward.
Initiatives such as the Digital Innovation Fund (DIGID) and Islamic Fintech Accelerator Programme are aimed at catalysing greater utilisation of financial technology within the capital market ecosystem, with DIGID slated to start funding its first batch of qualifying solutions in 2023.
Ongoing initiatives to enhance the digital literacy of retail investors towards strengthening protection of the more vulnerable including digital clinics for the urban B40 and seniors, as well as programmes for rural communities are being held.
A corporate scorecard is also being developed as a first step towards shaping a well-recognised, sustainable and high-performing organisation and this will be supplemented by upskilling and learning programmes for staff to enhance competencies.
"As the SC turns 30 in 2023, I am confident that the SC team as a whole will continue to display the same level of dedication and steadfastness they have shown throughout the years, combined with strong support and cooperation from industry players, we can only bring the Malaysian capital market to greater heights," he added. -Bernama
