Equites
The equity market was influenced by developments in the domestic economy, further impacted by global headwinds such as volatility driven by the direction and pace of global monetary policy, ongoing geopolitical conflicts and slower global growth overall.
Like its global peers, Bursa Malaysia endured turbulence in the last few years. Despite external and internal headwinds, the overall market capitalisation of the local bourse ended higher at RM1.80 trillion in 2023 (2022: RM1.74 trillion), while the FBMKLCI moderated to RM1.01trillion (2022: RM1.03 trillion). Although the benchmark FBMKLCI index declined by 2.73%, the FBM Mid 70 and FBM Small Cap indices rose by 12.28% and 9.57% respectively, reflecting a positive shift in sentiment towards small to medium-sized (SME) companies. In 2023, the SC continued to introduce further measures to enhance the equity capital market (ECM) with the introduction of fractional share trading, a new, accelerated transfer process from ACE Market to the Main Market and further measures to safeguard investors’ interest in relation to offerings by the unlisted public companies (UPCs).
Profile of Malaysian Equity Market
Bursa Malaysia has the distinction of being among the largest bourses in ASEAN with over 1,000 listed companies. Investors can choose from a variety of listed products, including equities, derivatives, exchange-traded funds (ETFs), real estate investment trusts (REITs), and exchange traded bonds and sukuk (ETBS). Notably, 811 (81.51%) of the 1,014 listed entities on the local bourse were Shariah-compliant securities as at end-December 2023. These accounted for RM1.16 trillion or 64.32% of Bursa Malaysia’s overall market capitalisation as at the same date, registering a 3.25% increase compared to end-2022.
In terms of fund raising, a total of RM9.4 billion was raised in 2023. Of this amount, RM3.6 billion originated from the primary market, i.e., via 32 initial public offering (IPOs). Secondary fundraising activities declined to RM5.8 billion (2022:RM22.6 billion) amid lower corporate activities. Despite the mixed performance across the segments, the total IPO fundraising continued to trend upwards, bringing the total issuances in-line with the 10-year average of RM111.2 billion per annum.
Types of Markets on Bursa Malaysia
Bursa Malaysia operates through three (3) markets – the Main Market, the ACE Market and the LEAP Market. Each has a different set of listing criteria for aspiring candidates. The following represents some of the most salient points of the respective markets.
- The Main Market is the primary market for larger companies with strong operating and profit track records, with a minimum required market capitalisation of RM500 million upon listing, among other things.
- The ACE Market is a sponsor-driven alternative market designed for smaller companies that exhibit strong growth potential. No minimum profit or operating track record is required for listing.
- The LEAP Market is a fundraising platform for what are perceived as underserved SMEs, which do not need to demonstrate any operating or financial track record. This adviser-driven market is only available to sophisticated investors.
Listing Process and Platforms
The listing process (from the time the candidate engages an adviser to the day of listing) usually takes four to nine months, depending on the structure and complexity of the listing scheme. Upon approval, the entity will be given six (6) months to complete its IPO exercise. In December 2023, the SC announced an accelerated transfer process as part of its ongoing public market review for a clearer delineation of key market segments. The new accelerated transfer process which took effect in January 2024 aims to facilitate the promotion of eligible ACE Market listed corporations to the Main Market of Bursa Malaysia with a shorter turnaround time (3 months), creating a clear pathway to promote the attractiveness of the overall equity market.
Bursa Malaysia also offers an end-to-end Shariah-compliant investing platform, along with the world’s first end-to-end Shariah-compliant commodities-trading platform. In recognition of the importance of sustainable and responsible investment, Bursa Malaysia launched the FTSE4Good Index in 2014. This index provides investors with an internationally benchmarked measure of domestic company performance based on ESG standards. In July 2021, the local bourse introduced the FTSE4Good Bursa Malaysia Shariah Index – the Shariah-compliant edition of the former. This new index will assist fund managers in developing new investment products constituting a portfolio of Shariah-compliant equities, guided by sustainable investing principles.
Investor Profile
The Malaysian stock market benefits from a diverse pool of investors, underscored by robust support from local institutional and retail investors. Domestic institutions accumulated a sum of RM3.30 billion in 2023 (2022: RM6.53 billion), while local retail investors turned net sellers to the tune of RM0.96 billion. Despite the net sell position, the participation rate for retail investors continued to improve to an average of 27.45% in 2023 (2022: 25.7%), suggesting that the domestic equity market continued to provide opportunities and value for a wide range of investors. Foreign investors turned to net sellers of Malaysian equities amounting a total of RM2.34 billion in 2023, a contrast to the RM4.40 billion invested/buy in 2022.
Trading Procedures
To invest in shares in Malaysia, one must be over the age of 18, open a Central Depository System (CDS) account and a trading account at a stockbroking firm. The specific steps to follow, to start your trading and investing journey after opening your accounts are detailed on Bursa Malaysia’s website.
Regulatory System
The SC is the ultimate regulator of Malaysia’s capital markets, including the equity market. As the front-line regulator, Bursa Malaysia, is tasked with preserving and promoting a fair and orderly market for the trading of securities and derivatives. The SC supervises and monitors Bursa Malaysia on listing, trading, clearing, settlement, and depository operations – to ensure the latter effectively performs its regulatory duties and obligations. Brokers and regulated entities must comply with the various rules set by Bursa Malaysia.
