KUALA LUMPUR (March 27): Malaysia’s total funds raised in the capital market climbed 36.6% to RM179.4 billion in 2022, from RM131.3 billion a year earlier, despite an increasingly pessimistic global economic outlook and tighter global financial conditions.
Of the entire amount, RM26 billion was raised via the equity market (with RM3.5 billion via 35 initial public offerings and RM22.6 billion through secondary fundraising), while RM153.3 billion was issued through the corporate bond market, according to the Securities Commission Malaysia's (SC) Annual Report 2022 released on Monday (March 27).
Likewise, alternative fundraising avenues via equity crowdfunding and peer-to-peer also increased to RM1.7 billion, compared with RM1.4 billion in 2021, and this continued to support funding needs of micro, small and medium enterprises.
However, the fund management industry experienced weaker market valuation and net redemption in 2022, with assets under management (AUM) decreasing to RM906.5 billion from RM951.1 billion in the previous year.
Unit trusts' total net asset value — which remained the largest source of funds for AUM — dropped to RM487.9 billion from RM526.9 billion in 2021, according to the SC.
“Overall, the size of the capital market rose to RM3.6 trillion in 2022, from RM3.5 trillion in 2021, as the drop in equity market capitalisation was offset by higher bonds and sukuk outstanding,” the SC explained.
Total bonds and sukuk outstanding grew to RM1.9 trillion in 2022, from RM1.7 trillion in 2021, reflecting higher levels of bond and sukuk fundraising in the market, the SC said.
It noted that the overall Malaysian Government Securities (MGS) yield curve shifted upward, tracking the movements of the global bond market, driven by expectations of continued monetary policy normalisation globally and domestically, given elevated inflationary pressures.
“The spread between corporate bonds and MGS widened across major tenures, except for three-year notes.
“Meanwhile, the domestic bond market witnessed lower foreign interest, with a net outflow amounting to RM9.8 billion in 2022 (2021: net inflow of RM33.6 billion),” it stated.
Moving forward, the SC said, the performance of the Malaysian capital market is projected to remain resilient, in line with the domestic economy.
“However, it will continue to be influenced by key global developments, with volatility expected to be driven by the rate of global monetary policy tightening and geopolitical developments.
“Nevertheless, conditions in the domestic capital market [are] expected to remain orderly, and continue to support the economy, underpinned by strong macroeconomic fundamentals and supportive capital market infrastructure,” it added.