KUALA LUMPUR (September 21): Malaysia, like most global jurisdictions, has seen an overall decline in Initial Public Offerings (IPOs) over the past decade as more companies have chosen to stay private more a long time, said the Securities Commission Malaysia (SC).
This is the result of greater liquidity in the private markets, thus providing companies with greater control and flexibility, the SC said in its Capital Market Masterplan 3 (CMP3) (2021-2025) report today. hui.
Despite these trends, the mid and small cap (MidS) segment of the equity market has seen a higher number of IPOs and increased trading activity, the report notes.
“The increase in listings by MidS companies has been made possible by initiatives such as the establishment of the LEAP marketplace and an enhanced listing transfer framework from the ACE market to the mainstream market.
“The improvement in trading activity was in part enabled by better research coverage through the MidS Research Scheme, lower trading costs with the MidS-specific stamp duty exemption and resulting greater liquidity. various indices linked to the MidS, as well as index futures, ”the SC said.
Meanwhile, the CMP3 report indicates that the corporate bond and sukuk market has continued to be a major fundraising avenue over the past decade, with outstanding amounts increasing 8.9% from the rate of compound annual growth (CAGR) to reach RM732.4 billion in 2020.
The share of corporate bonds and sukuk in total issuance rose to 28.5%, from 13.0% in 2010, according to the report.
This growth, he said, has been based on facilitation policies, which have strengthened local credit scoring capacities, as well as increased fundraising flexibilities with liberalized limits and credit rating requirements. credit rating.
The report also noted that the changing investment needs of Malaysian investors have generated significant growth in industry assets under management (AUM) and brought changes to the Malaysian investment landscape, including greater diversity in the range of products and better intermediation capacity.
As a result, assets under management grew at a compound rate of 9.1% per year to reach RM905.5 billion in 2020, from RM377.5 billion in 2010.
In addition, the SC noted that the introduction of the Private Pension Scheme (PRS) offered individuals a private option to supplement the mandatory public pension scheme and longer term savings flexibility.
Since the establishment of PRS in 2012, its assets under management have grown by a CAGR of 71.5%, from 62.7 million ringgit in 2012 to 4.7 billion ringgit in 2020.
In the Islamic Capital Market (ICM), the CMP3 report indicates that Malaysia continues to be a leading global ICM hub and a global leader in outstanding sukuk and issuance in 2020, with Sharia-compliant assets amounting to RM2.3 trillion at the end of 2020, having cultivated from RM1.1 trillion in 2010.
“The exceptional Malaysian sukuk has more than tripled in size thanks to facilitating development policies. Assets under Islamic management increased by 2.7 times, supported by the initiatives described in the Master Plan of Islamic Fund and Wealth Management of the Securities Commission, which was launched in 2017, ”said said the SC.
The report also observed that the introduction of the Sukuk Framework for Sustainable and Responsible Investment (SRI Sukuk Framework) and the Guidelines on Sustainable and Responsible Investment Funds (SRI Fund Guidelines) took advantage of the similarities between the underlying principles of Islamic finance and SRI.
“This has so far produced 13 ISR sukuk issuers, with a combined total issuance of RM 5.5 billion as of December 2020 and catalyzed a series of innovative ICM-SRI product structures.
“In fact, Malaysia has one of the largest SRI assets in the Asian region (excluding Japan) due to the strength and scale of its Islamic funds, which are recognized as part of the global SRI universe. “, he added.