Why Capital Markets Malaysia
Capital Markets Malaysia (CMM) is a platform that provides comprehensive information on the various segments of the Malaysian capital market.
CMM helps to explain the key features of the capital market in Malaysia and how it is underpinned by a vibrant economy located in the heart of ASEAN, one of the highest growing regions in the world.
Also, additional information is outlined here for international portfolio investors considering investing in Malaysia and how Malaysia differs from the offerings of other countries and regions.
The Four Pillars
CMM was established by Securities Commission Malaysia (SC) to further develop and position Malaysia’s capital market internationally. The Malaysian capital market is classified as an advanced emerging market in the FTSE Global Equity Index Series since 2013. CMM focuses its efforts on the four primary pillars of the capital market:
CMM also highlights the importance of the Islamic Capital Market and the Sustainable and Responsible Investment (SRI) framework, which cuts across all four market segments to expand the spectrum of product offerings to issuers and investors in the Malaysian capital market.
Equities - Largest in ASEAN
Malaysia is home to one of the largest equity markets and has the largest number of listed companies in ASEAN. Given the level of maturity, companies listed in Malaysia are highly diversified across different sectors and many companies are also regionally diversified.
Regarded as a safe haven, Malaysia‘s equity market provides investors with stability against volatility – this is reflected clearly in the MSCI Asia Pacific Risk Weighted Index, in which they represent 8.24% of the index as of 30th June 2017.
In terms of primary fundraising, Malaysia has reached a more advanced stage compared to many of its neighbours within ASEAN. A large number of Malaysian listed companies have become regional and global players through both organic growth and strategic expansion achieved through acquisitions. This provides investors with great exposure to opportunities within ASEAN and beyond by investing in Malaysian equities. This development has also benefited the secondary equity market – in 2016, RM11.8 billion of equity fundraising was raised via the secondary market.
Fixed Income - Largest in ASEAN, Third Largest in Asia
Malaysia has the third largest fixed income market relative to GDP in Asia after Japan and South Korea, and the largest in ASEAN, predominantly due to the rapid expansion of the Malaysian sukuk (Islamic bonds) market that has played pivotal means in financing economic development across key segments such as infrastructure.
The Malaysian fixed income market has grown by 10% annually on a compounded basis in the last 10 years. In the sukuk market, Malaysia has consistently maintained the position as the global leader with 53% share of the world’s sukuk market.
Malaysia has developed deep experience in structuring and raising funds in both the conventional and Islamic fixed income markets and is widely recognised as being the leading international marketplace for sukuk issuances.
Fund Management - Largest Islamic Funds Under Management in the World
Malaysia benefits from having international fund management expertise due to key international players having chosen the country as a global Islamic hub for their Islamic asset management operations.
Total assets under management (AUM) in Malaysia have seen a compounded growth rate of 10.8% annually since 2010, and their diversification in fund management is demonstrated by their ranking as the largest country for Islamic AUM globally with 32% of the world’s market share.
The fund management industry in Malaysia is also backed by a strong domestic institutional base which provides support for the Malaysian capital market and reduces volatility resulting from inflows and outflows of funds from foreign investors.
Alternative Assets - New and Different Ways of Raising Money
The Malaysian capital market regulator, Securities Commission Malaysia (SC), continuously looks at alternative ways of providing financing in addition to the conventional equity and fixed income markets. Among these is equity crowdfunding (ECF), ECF represents a growing market segment which democratises the financing process by using technology to provide small participants and entrepreneurs’ cheap access to seed capital which would otherwise not be available to them.
In 2015, Malaysia became the first ASEAN country to introduce an ECF framework and is among the first in the Asia Pacific region. Six platform operators are now fully operational with 14 issuers collectively raising a total of RM10.4 million as at December 2016. Also, ECF is expected to gain further momentum over the years and help set off the peer-to-peer (P2P) financing platforms that are expected to be fully operated by end of 2017. SC has announced six P2P financing operators to further broaden financing avenues for entrepreneurs and small business owners to obtain working capital or capital for growth in which two operators, B2B Finpal and Funding Societies, have been operationalized as of 30th June 2017.
Other activities contemplated include the promotion of a wider range of exchange traded funds (ETFs) from the existing eight funds (as at December 2016) to reflect the diversity of the country and the region. Furthermore, the launch of a new private retirement scheme (PRS) and six additional new retirement funds in 2016 aims to further increase the growth of members contributing to a PRS fund. At the same time, private equity and venture capital outfits are expected to further grow and develop their portfolio. These companies have and will continue to play an important role as feeder to the capital market (namely equity markets) for many years to come.
The Islamic Capital Market – World’s Largest Sukuk Market
As mentioned earlier, Malaysia is a global leader in sukuk issuances and is widely recognised as being the leading international marketplace for sukuk issuances. Malaysia currently holds 53% share of the global sukuk market. Malaysia’s Islamic market holds 60% of the country’s overall capital market as of the first half of 2017.
It has depth of expertise in Islamic equities, fixed income and asset management, and has pioneered the creation and development of guidelines and relevant framework within the global Islamic capital market.
Examples include: the establishment of the Malaysia International Islamic Financial Centre (MIFC) in 2006 as a one-stop contact point to facilitate the issuance of sukuk; the development of the SRI Sukuk Framework in Malaysia in 2014 and the upcoming establishment of the world’s first Islamic venture capital fund.
As Malaysia continues to build on the framework for identifying and developing new Islamic products in the capital market, it aims to lead in other relevant segments. Recent interest in SRI provides further potential for expansion of the Islamic capital market due to sustainability being a key common factor between Islamic finance and SRI.
Sustainable and Responsible Investment
The recent interest in SRI – the concept of making investment decisions that take into account not only financial return but also the social and environmental impacts brought about by the investment – has cast a wider net for fixed income issuances and in particular, Islamic fixed income financing in Malaysia.
Malaysia is the largest SRI market in Asia with a 34% market share by virtue of its Islamic funds industry being recognised as SRI-compliant according to the Global Sustainable Investment Review 2016. With sustainability being a key common factor between Islamic finance and SRI, there are ample growth opportunities for fixed income fundraising within the SRI framework.
As part of its mandate to develop the capital market, the main regulator, Securities Commission Malaysia (SC), set up the Capital Markets Promotion Council (CMPC) in 2012 to strengthen its internationalisation agenda for Malaysia’s capital market, as set out in the Capital Market Masterplan 2 (CMP2). SC firmly believes that the outcome will translate into a strong and vibrant capital market with depth and diversity that will benefit the economy and provide growth opportunities for the industry.
In the 2013 Federal Budget speech, the Prime Minister had announced the creation of CMPC in recognition of the need for a holistic promotional initiative that will proactively position Malaysia as a centre for investment and fundraising in the international arena.
CMPC was rebranded as Capital Markets Malaysia (CMM), and structured as a promotional initiative that would leverage on the industry’s expertise in shaping its strategies. In 2014, SC launched CMM, representing the multi-faceted Malaysian capital market with its wide range of conventional and Islamic products.
CMM ensures consistency and coordination among various stakeholders of the capital market in promoting the offerings and expertise of the market through different communication channels. An integrated international agenda will facilitate the promotion of the Malaysian capital marketplace, bringing together investors and investment opportunities.
In order to achieve impactful outcomes from this national agenda, it was concluded that consistent marketing and business development is necessary on a global platform to position Malaysia as an international marketplace for investment and fundraising opportunities and transactions.
CMM was tasked to effectively profile the competitiveness and attractiveness of the various segments of the capital market via a comprehensive and integrated approach to increase international participation and enhance opportunities for Malaysian capital market intermediaries.
CMM’s primary functions include:
- Acting as an intermediary to connect international investors/issuers to the appropriate entities within the Malaysian capital market
- Supporting access to current relevant information to enable issuers and investors to access the full spectrum of instruments in the Malaysian capital market
- Channelling industry feedback and providing insights to regulators and policymakers on improvements required to further enhance Malaysia’s competitiveness
- Maintaining independence in carrying out the scope of work
Below are CMM’s senior management:
Azhar Zabidi, Chief Executive Officer
Azhar was appointed the Chief Executive Officer of Capital Markets Malaysia (CMM) in September 2015. He is responsible for strengthening Malaysia’s position as an international capital market and drive greater levels of participation to ensure on-going and future growth.
He has 20 years of experience in the financial sector, leading some of Malaysia’s largest IPOs, bond issuances and global mergers and acquisitions (M&A) transactions for Malaysian corporates. He advised on numerous high-profile and notable industry shaping transactions. Among his key successes, Azhar helped lead and successfully list Malaysia’s first Real Estate Investment Trust - Axis REIT, the Jakarta Stock Exchange listing of Malaysian-owned PT Malindo Feedmills TBK, the listing of Rangsit Future Park on the Stock Exchange of Thailand (CIMB’s first Thai IPO) and recently helped lead the listing of the world’s second largest healthcare company on Bursa Malaysia - IHH Healthcare.
He has held key roles in investment banking/advisory operations for Malaysia in financial organisations such as Bank of America/Merrill Lynch, Kenanga Investment Bank, HSBC, CIMB Group and Malayan Banking.
Zalina Shamsudin, Head of Strategy and Business Development
Zalina was appointed to her current position in June 2014. She has over 20 years of experience, predominantly in corporate advisory, and has worked in five countries in different regions of Asia, the Middle East and the Indian subcontinent. Her key skills are in analysing and identifying solutions for long-term growth and sustainability.
Zalina returned to Malaysia in 2011 and joined InvestKL, a promotional agency for Malaysia’s capital and largest city, Kuala Lumpur, as Head of Advisory and Research. She holds a MBA in Finance from CASS Business School, UK and is a Fellow of the Association of Certified Chartered Accountants (ACCA).
Navina Balasingam, Head of Research, Communications and Branding
Navina was recently appointed in August 2017 bringing with her extensive expertise in corporate event management and planning. She has managed the end-to-end planning of high level forums, dialogues and seminars in over 20 countries across Asia, Europe and the Middle East and has had extensive experience in building collaborative relationships with regulators and industry players in key financial markets globally.
Navina has led cross-functional teams in content research, event marketing and business development. With 20 years of experience, she kick started her career in MarcusEvans and has held major roles in companies such as REDmoney Group, LexisNexis Asia, and IQPC.
If you require further information not available on this website, please e-mail Preetha Subramaniam at [email protected] or call +603 6204 8546.