SC chairman says the lower YoY projected fundraising is due to 2017 being an exception to the norm

By NG MIN SHEN / Pic By ISMAIL CHE RUS

Total fundraising through the domestic capital market is anticipated to reach RM120 billion this year, with the bulk raised from debt issues to fund infrastructure development.

Total funds raised in 2017 was at a record high of RM146.6 billion.

The Securities Commission Malaysia (SC) said it expects domestic fundraising to be driven by capital raising in the corporate bond and sukuk market for infrastructure financing, as well as refinancing of bonds and sukuk.

“Fundraising through the corporate bond and sukuk market is expected to amount to about RM100 billion. Equity fundraising is expected to be around RM20 billion with RM8 billion raised via initial public offerings (IPOs). The remaining RM12 billion will be via the secondary market,” the regulator noted in its 2017 annual report released yesterday.

SC chairman Tan Sri Ranjit Ajit Singh said the lower year- on-year (YoY) projected fund-raising was due to 2017 being an exception to the norm, adding that the expected figure for 2018 is still higher than the average for the past five years.

“Markets have outlier periods. The 2017 figure was an exceptionally strong outlier due to many factors, such as people anticipating rate hikes and positioning things differently, and companies deferring capital raising from 2015 and 2016 to 2017,” he told reporters at the report launch in Kuala Lumpur yesterday.

The outlook for the local capital market remains positive, given improving macro fundamentals, strengthening currency and improved investor sentiment.

Listed companies are expected to see earnings recovering further into 2018, driven by improving trade and exports, stronger commodity prices, sustained domestic household expenditure and higher rates which should support the finance sector.

Of the total RM146.6 billion raised last year, RM124.9 billion was in the corporate and bond market, RM7.2 billion via 12 IPOs and RM14.5 billion in the secondary equity market.

“A strong upward momentum in the business activity was reflected in corporate bond and sukuk issuances, which exceeded the RM100 billion mark for the first time since 2012,” Ranjit said.

This helped the Malaysian capital market grow 12.6% YoY to RM3.2 trillion in 2017, the SC report noted.

Bursa Malaysia’s market capitalisation rose 14.4% YoY to RM1.91 trillion with the small-cap and ACE Market stocks the year’s biggest gainers.

The top performing sectors were the information technology (IT) and consumer staples sectors. IT stocks tracked higher on demand for semi- conductors globally, while stocks in the consumer staples segment benefitted from strong household consumption in 2017.

Foreign investors were net buyers with cumulative net inflows of RM10.8 billion as at end-2017.

Bonds and sukuk outstanding climbed 10.1% YoY to RM1.29 trillion in 2017, buoyed by positive economic data and a strong ringgit position, while the Islamic capital market expanded 11.9% YoY to RM1.9 trillion.

Total assets under management increased 11.5% YoY to RM776.2 billion as the unit trust industry saw a 19.1% YoY jump in net asset value to RM427 billion in 2017.

The SC will be licensing the first digital investment manager, also known as robo-advisory, in 2018.

This is in line with its digital markets strategy, Ranjit said, adding that significant interest has been registered for robo-advisors — financial advisors that provide financial or investment advice online, with little to no human input.

The SC yesterday announced the establishment of the Brokerage Industry Digitisation Group (BRIDGe), a joint working group including the SC, Bank Negara Malaysia and the industry, to accelerate digitisation of the stockbroking industry.

BRIDGe aims to discover digital innovations across the value chain, thus reducing cost and increasing efficiency.