KUALA LUMPUR (March 28): Total funds raised in the capital market remained robust in 2021, rising 14.22% to RM130.9 billion from RM114.6 billion in 2020, above the five-year pre-pandemic average of RM121.4 billion, according to the Securities Commission Malaysia (SC)’s 2021 annual report released on Monday (March 28).

Among them, RM16.6 billion was raised via the equity market, while RM114.3 billion was raised through the corporate bond market — up from RM10 billion and RM104.6 billion in 2020.

In the equity market, RM2.3 billion was raised via 29 initial public offerings (IPOs) and RM14.3 billion through secondary fundraising. Four of the IPOs were implemented by way of introduction and did not entail any fundraising exercise.

Meanwhile, alternative financing avenues via equity crowdfunding (ECF) and peer-to-peer financing (P2P financing) continued to gain traction, increasing to RM1.4 billion in 2021 from RM640.4 million in 2020, especially in supporting the funding needs of micro, small and medium enterprises.

Likewise, the fund management industry grew further during the year, with asset under management (AUM) totalling RM951.1 billion, as compared to RM905.5 billion in 2020. This mainly reflects increased diversification of financial assets in domestic and foreign markets, with the unit trust segment remaining the largest source of funds for AUM.

Overall, the size of the capital market rose to RM3.5 trillion in 2021, from RM3.4 trillion in 2020.

According to the report, the domestic equity market was affected by continued headwinds, both globally and domestically.

The overall market capitalisation of Bursa Malaysia and the FBMKLCI moderated to RM1.79 trillion and RM1.04 trillion respectively in 2021, from RM1.82 trillion and RM1.06 trillion in 2020.

Likewise, the FBMKLCI index declined by 3.7% to end the year at 1,567.5 points.

Nevertheless, sentiments in the domestic equity market remained in favour of FBM Small Cap companies, given their continued outperformance during the year.

In terms of trade participation, local institutions turned net sellers to a total of RM9.1 billion in 2021, while net selling by non-residents eased to RM3.1 billion from RM24.6 billion in 2020.

Correspondingly, net buying by local retail investors rose to RM12.2 billion.

The participation rate for retail investors thus was higher in 2021, rising to an average of 34.6% in terms of value traded.

In the Malaysian bond market, total bonds outstanding grew to RM1.7 trillion in 2021 from RM1.6 trillion in 2020, reflecting higher levels of debt fundraising.

The overall Malaysian Government Securities (MGS) yield curve broadly shifted upwards, led by mid-to long-term tenures, in tandem with the general increase in global bond yields amid higher global inflation expectations and the prospect of faster global monetary policy normalisation.

Meanwhile, the spread between corporate bonds and MGS broadly narrowed across tenures, suggesting improved optimism on the domestic growth outlook, especially towards the end of 2021.

The domestic bond market also witnessed increased foreign interest, with net inflows amounting to RM33.6 billion in 2021, as compared to RM18.3 billion in 2020, the highest since 2012.

The performance of the Malaysian capital market is expected to improve further, in tandem with the recovery in the domestic economy, said the regulator.

However, it said 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.

Nevertheless, it said the domestic capital market will remain resilient, orderly, and supportive of the economy, underpinned by strong macroeconomic fundamentals, ample domestic liquidity, and resilient capital market infrastructure.

Read more stories from the SC Annual Report 2021 here.