KUALA LUMPUR, March 9 2017 : Malaysia’s capital market is expected to be positive this year and will continue to play a major role in supporting the country’s growth through financing of business expansion and infrastructure development.
The Securities Commission Malaysia (SC), in its Annual Report 2016 released today, said the total capital raising through primary and secondary markets is expected to improve in 2017 to around RM102 billion-RM105 billion, compared with RM98.5 billion last year.
“Fund-raising through the corporate bond and sukuk market in 2017 is expected to approximate the sum raised in 2016 and amount to about RM85 billion,” it said.
The SC said equity fund-raising is expected to be higher in 2017, and it is expected that approximately RM7 billion-RM9 billion will be raised via initial public offerings (2016: RM1.0 billion) while RM10 billion-RM11 billion will be raised through the secondary market (2016: RM11.8 billion).
The positive outlook for Malaysia’s capital market with growth expected across key market segments is underpinned by higher levels of corporate activity within a backdrop of sound economic fundamentals in place to support a consistent growth outlook, it said.
Against prevailing global uncertainties, the SC said, the low beta nature of the equity market, coupled with better dividend yields relative to regional peers, represents an attractive portfolio diversification opportunity.
Meanwhile, it said, earnings growth is expected to regain a positive momentum in 2017, in line with the roll-out of more infrastructure projects, better economic fundamentals such as an improving fiscal deficit and current account surplus as well as improving liquefied natural gas prices in tandem with higher crude oil prices.
“In particular, market consensus is positive for the oil and gas segment, plantation as well as construction sectors,” it said.
It said foreign shareholding in the equity market is at present in line with its long-term averages, with expectations of some inflows, assuming clarity in the global policy environment and an improvement in emerging market interest on the part of global investors.
The bond market, on the other hand, may see some fund outflows in line with the overall performance of global emerging market bonds given external factors but it should be mitigated by sound domestic economic fundamentals and domestic liquidity, it said.
The SC said despite having relatively high levels of foreign ownership, the profile of a majority of investors in the bond market suggests holdings are by long-term investors and should provide stability to foreign ownership levels.
On another note, SC said it will continue to place enforcement as priority and actions taken in 2016 yielded positive results.
The commission, in its 2016 Annual Report said insider trading prosecution made up the largest number of those charged making up 10 out of 17 individuals.
“RM1.79 million was disgorged through civil enforcement action and was restituted to 423 investors.
“Meanwhile, our success in the Repco Holding Bhd’s shares case saw the heaviest punishment meted out by the courts for market manipulation since SC’s inception,” it said.
Low Thiam Hock, often dubbed as Repco Low, was sentenced to five years imprisonment and a fine of RM5 million after he was convicted on Jan 11, 2016 for manipulating Repco shares in 1997.
SC has also charged four individuals under section 317A of the Capital Markets and Services Act 2007 (CMSA) for causing wrongful loss to a public-listed company (PLC).
It also applied for an injuction to prevent dissipation of a PLC’s assets arising from a breach of section 317A of CMSA.
“The range of actions taken for breaches of securities laws demonstrates the wide range of enforcement tools available to SC.
“Underscoring these efforts is our mandate to protect investors and maintain market intergrity,” SC said.
It said SC’s enforcement actions include pursuing criminal prosecution for serious market misconduct including insider trading, false and misleading financial statements, causing wrongful loss to PLCs and seeking financial penalties including disgorgement of profits to restitute investors. – Bernama