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Domestic Capital Market Remained Resilient In 2023, Registered Growth Of 5.6P To RM3.8tri

KUALA LUMPUR: The Securities Commission Malaysia has emphasised its commitment to advancing Malaysia’s capital market
and supporting its transition towards a low-carbon economy.

The Securities Commission released its annual report on Monday, outlining resilient capital market growth for 2023.

The capital market regulator is looking to refine the Sustainable and Responsible Investment (SRI) Taxonomy and develop the National Sustainability Reporting Framework to guide industry participants towards aligning with global sustainability standards.

In addition, the SC is conducting a comprehensive review of the Capital Market Services Act 2007 (CMSA) and the Securities Commission Malaysia Act 1993 (SCMA) to ensure their relevance and keep up with market changes.

In releasing the Annual Report 2023 on Monday, SC said the domestic capital market remained resilient in 2023, with the size of the market growing by 5.6 per cent to RM3.8 trillion from RM3.6 trillion registered in 2022, driven by the growth in total equity market capitalisation and bonds and sukuk outstanding.

SC said the fund management industry also grew strongly, with total assets under management (AUM) hitting a new high of RM975.5 billion in 2023 from RM906.5 billion in 2022 due largely to the positive valuation effect.

The SC also released the Audit Oversight Board Annual Report 2023 (AOB Report 2023), and the Capital Market Stability Review 2023 (CMSR 2023).

SC chairman Datuk Seri Dr Awang Adek Hussin said the strong capital market performance was achieved despite global economic challenges and diverging expectations of monetary policies in major economies.

“2023 also holds special significance as it marks SC’s 30th anniversary, a major milestone that underscores the growing maturity and resilience of the institution.

“The SC remains unwavering in our resolve to strengthen our regulatory framework and uphold market integrity, not least because we continue to be measured against global regulatory standards,” he said in a statement.

Other key highlights of the annual report 2023 include moderate fundraising in the equity and corporate bond market, which moderated to RM127.7 billion in 2023 from RM179.4 billion in 2022.

This was due to a decline in corporate bonds and sukuk issuance to RM118.3 billion from RM153.3 billion posted in 2022 due to lower refinancing demand and secondary equity fundraising, which stood at RM5.8 billion from RM22.6 billion in 2022, returning to pre-pandemic levels.

Further, initial product offerings (IPOs) improved to RM3.6 billion in 2023 from RM3.5 billion in 2022.

Alternative financing activities posted encouraging growth and continued to support the funding needs of micro, small and medium enterprises (MSMEs), with total funds raised amounting to RM3.8 billion in 2023 from RM3.0 billion in 2022.

SC also noted that the equity crowdfunding (ECF) and peer-to-peer financing (P2P) platforms have allowed over 15,000 MSMEs to raise more than RM6 billion since inception.

Although the benchmark FBM KLCI declined by 2.7 per cent, other market indices ended positively in 2023, reflecting investors’ interest in firms with higher growth potential, particularly the mid-and small-cap segments.

SC noted that currently, the domestic equity market is among the best-performing markets in the region, with the FBM KLCI
gaining almost 7.0 per cent as of March 12 of this year.

The Malaysian Islamic capital market (ICM) grew 4.5 per cent to RM2.4 trillion in 2023, with sukuk outstanding growing by 7.4 per cent and Shariah-compliant equities by 1.5 per cent.

SC said the agency has issued the Maqasid Al-Shariah Guidance to strengthen the ICM’s competitive advantage and bolster its societal and economic impact.

This is the first time such guidance has been used in the capital market.

In 2023, the SC secured five criminal convictions and RM8.7 million in fines, and RM4.8 million in civil penalties imposed by the courts.

The SC also disgorged RM13.8 million according to regulatory settlements with 6 persons in separate cases.

Additionally, 140 administrative sanctions were imposed, resulting in the SC imposing fines and penalties amounting to RM19.5 million.

Moving forward, SC will also soon launch a 5-year MSME Roadmap, which aims to provide increased access to the capital market for MSMEs.

The SC will continue to enhance investor protection. This involves rigorous surveillance against unlicensed activities.

In addition, the SC is also reviewing the regulatory framework governing fundraising by unlisted public companies (UPCs).

To combat the risk of money laundering and terrorism financing, the SC continues to step up efforts in supervision and industry controls to ensure regulatory effectiveness of the anti-money laundering (AML) regime, and support the preparation of the Financial Action Task Force Mutual Evaluation in 2025.

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