KUALA LUMPUR (March 25): The domestic capital market is projected to remain orderly throughout 2024, supported by robust macroeconomic factors, abundant domestic liquidity, and a facilitative capital market framework, according to Securities Commission Malaysia (SC).

“The domestic capital market is expected to remain stable, fair and orderly, backed by sound economic fundamentals, ample domestic liquidity and a supportive policy environment,” the SC said in its Annual Report 2023.

The statutory regulator, however, flagged that the external factors may introduce volatility this year, dragged by the direction of global monetary policy and evolving geopolitical tensions.

As the National Higher Education Fund Corp (PTPTN) enters its 27th year of supporting the higher education needs of Malaysian students, the stakes have never been higher. Its mandate remains: to ensure no Malaysian student who wishes to pursue tertiary education is left behind because of financial constraints.

Nonetheless, it is foreseen that the favourable momentum in late 2023 will continue into 2024, driven by the Madani economy framework policy, such as the New Industrial Master Plan (NIMP) 2030 and the National Energy Transition Roadmap (NETR).

“These national policies are expected to provide a tailwind in the short to medium term, amid greater policy clarity and a continued commitment by the government towards improving medium-term economic growth prospects,” it said.

On top of favourable policies, market expectations will also remain broadly positive, with benchmark FBM KLCI projected to end 2024 at around 1,600 points, according to the SC.

Last year, the benchmark index declined 2.73% to end the year at 1,454.66 points; however, the FBM Mid 70 rose 12.28% to 14,612.98 points and FBM Small Cap was up 9.57% to 16,353.38 points.

"The overall market capitalisation of the local bourse ended higher at RM1.80 trillion in 2023 (2022: RM1.74 trillion), while the FBM KLCI moderated to RM1.01 trillion (2022: RM1.03 trillion). This reflects a positive shift in sentiments favouring medium and small-size companies, as reflected by the favourable performances of FBM Mid 70 and FBM Small Cap," it said.

Malaysia’s domestic capital market rose 5.56% to RM3.8 trillion in 2023 from RM3.6 trillion in 2022, thanks to the broad-based growth in both total Bursa Malaysia market capitalisation and bonds and sukuk outstanding.

Similarly, the fund management industry expanded in 2023, with total assets under management (AUM) rising to a record high of RM975.5 billion from RM906.5 billion in 2022, amid improvement in market value and greater asset allocation in developed markets.

“The unit trust segment remained the largest source of funds, comprising 51.3% of total AUM (2022: 53.9% of total),” the SC said.

Despite the positive improvement, the SC saw mixed capital market performance last year due to continued economic uncertainty stemming from escalating geopolitical tensions, a weaker-than-expected economic recovery in China, and the movement of the ringgit against major currencies in the foreign exchange market.

Consequently, total funds raised in the capital market were moderated to RM127.7 billion in 2023, compared to a high of RM179.4 billion in 2022.

In the equity market, primary issuances improved slightly to RM3.6 billion from RM3.5 billion in 2022 via 32 initial public offerings (IPOs), while secondary fundraising activities declined to RM5.8 billion against RM22.6 billion in 2023, amid lower corporate activities in 2023.

In the corporate bonds and sukuk market, total issuances normalised to RM118.3 billion in 2023 from RM153.3 billion in 2022, following higher refinancing demand in the previous year.

Nonetheless, the SC noted that the total issuances remained healthy and in line with the 10-year average of RM111.2 billion per annum.

"The Malaysian bonds and sukuk market continued to witness issuances in sustainability-related instruments, affirming the capital market’s pivotal role in supporting financing needs towards achieving the nation’s sustainability agenda," it said.

Malaysia's total bonds and sukuk outstanding grew to RM2 trillion in 2023 from RM1.87 trillion in the previous year, fuelled by the continued bond and sukuk fundraising, particularly from the public sector.

Meanwhile, the domestic bond market witnessed the return of foreign investors, with net inflows amounting to RM25.78 billion in 2023 as compared to net outflows of RM9.78 billion in 2022. 

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