The projection is ‘healthy’ as disruptions caused by the Covid-19 pandemic saw only 19 new listings last year, says chairman
by ASILA JALIL / pic by MUHD AMIN NAHARUL
THE Securities Commission Malaysia (SC) is expecting 30 companies to debut on Bursa Malaysia this year amid continued uncertainty over the pace of economic recovery from the Covid-19 pandemic.
SC chairman Datuk Syed Zaid Syed Jaffar Albar (picture) described the IPO projection as a “healthy” figure as disruptions caused by the Covid-19 pandemic last year saw only 19 new listings including two new companies on the Main Market.
To compare, 30 companies debuted in 2019 consisting of four on the Main Market, 11 on the ACE Market and 15 on the LEAP Market, data on Bursa Malaysia’s website showed. In 2018, there were 22 IPOs.
Syed Zaid, in a virtual press conference on the SC’s 2020 Annual Report yesterday, said the capital market will continue to be a key source of financing, and IPOs allow firms to raise funds for expansions and improve their corporate standing.
The regulator also expects continued development in the bond and sukuk market, according to its market and corporate supervision ED Kamarudin Hashim.
He said issuance of corporate bonds and sukuk for this year is expected to be in the range RM100 billion and RM110 billion, based on industry feedback.
“We see continued economic recovery which will lead to an increase in private investment as business confidence rises.
“The present conducive financing landscape will also persuade issuers to raise their issuance for a much lower financing cost,” Kamaruddin said.
Syed Zaid said the SC welcomes the increase in retail participation on Bursa Malaysia as this helps create a healthy and vibrant marketplace.
“The improved retail participation in our stock market was clearly evident with local investors making up about 32.4% of total value traded, which is significantly higher than the five-year average of 24%,” he said.
On the matter of appointment of politicians to the boards of some listed companies recently, Syed Zaid opined shareholders have the power to appoint directors by exercising their voting rights.
He urged shareholders to exercise their rights to ensure the individuals are deemed fit and proper to ensure the sustained growth of the companies.
“The nominating committee of the listed companies also has the responsibility to ensure the person nominated to sit on the board is competent and can dedicate sufficient time in discharging their duties as a board member,” he said. Syed Zaid noted that fund flows to emerging markets (EMs), including Malaysia, were affected by the pandemic as investors adopted a risk-off approach and “general flight to safety”.
This was evident in the rise of gold price over the course of the year and affirmed demand for other safe-haven assets like bonds, he said.
SC deputy CEO Datuk Zainal Izlan Zainal Abidin said EMs ex-China and India saw a net foreign outflow of about US$56 billion (RM230.16 billion) from the respective equity markets last year, with Asean markets contributing some US$20 billion of outflows.
As a result, as at the end of February this year, foreign shareholding of Malaysian equity stood at 20.4% compared to 22.4% average over the last 20 years.
“Fluctuations in foreign participation across market cycles are not uncommon and we have seen repeatedly in the past where foreign funds came in and got out of our market sometimes in a short period of time.
“Essentially, when there are opportunities to make some return, investors will re-emerge and we see this repeating itself,” he said.
To date, the SC has eight digital investment managers and the number of account opened last year has increased by more than 700%.
The three digital asset exchanges, namely Luno Malaysia Sdn Bhd, Sinegy Technologies (M) Sdn Bhd and Tokenize Technology (M) Sdn Bhd, have some 450,000 accounts opened across the three platforms to date.
The SC noted that the Malaysian capital market expanded 7% to RM3.4 trillion in 2020 from RM3.2 trillion in 2019.
Total funds raised via the equity and corporate bond markets were at RM115 billion, supported by a 76% increase in secondary issuances of equities.
Equity crowdfunding and peer-to-peer financing also recorded continued growth momentum, increasing by 43% year-on-year to RM631 million raised by various micro, small and medium enterprises.
Overall, assets under management grew by 10% last year to RM905.5 billion, reflecting stronger investor interest in the capital market.
The SC continued to pursue swift and effective outcomes through the utilisation of a wide range of enforcement tools.
Five criminal convictions were secured for securities fraud, insider trading and false financial disclosure, while close to RM3.9 million was resituated to 533 investors and RM2.2 million penalties imposed via civil action.
During the year, the SC also imposed 45 administrative sanctions for various breaches of securities law and guidelines, the regulator stated.