High Growth, Open Economy
Malaysia has a diverse and robust economic environment with a capital market size of RM 3.202 billion as of December 2019. The International Monetary Fund (IMF) reported that global growth was the slowest in 2019 on the back of global trade barriers, geopolitical concerns and weakening economics of certain large emerging economies. Despite these external uncertainties, the Malaysian economy grew 3.6% (y-o-y) in the fourth quarter of 2019. This growth was predominantly driven by domestic demand as private consumption registered an increase of 8.1% and private investment growth of 4.2% with the bulk of capital outlays were concentrated in services and manufacturing sectors. As at 31 December 2019, Malaysia’s international reserves stood at RM424.1 billion, sufficient to finance 7.5 months of retained imports and is 1.1 times total short-term external debt.
The Malaysian Capital Market
Besides growing in size, if we were to measure progress as per the IMF’s index of financial development for Malaysia, it shows consistent development particularly in terms of depth, access and efficiency. The IMF’s measurement indicates that Malaysia’s overall financial sector development has improved significantly between 1993 and 2016.
In terms of international comparison, data collected by the Securities Commission (SC) Malaysia shows Malaysia has achieved commendable performance overall and is ahead of emerging market peers and in some aspects, advanced financial markets.
Recognising the shift in market trend of growing interest in fund raising and investment through private markets, the SC has also supported the development of digital market access by being the first jurisdiction to regulate equity crowdfunding. In addition, the SC has also been recording the development of the private equity and venture capital industry in Malaysia with the introduction of registration in 2015 and the setup of Malaysian Venture Capital and Private Equity Development
Malaysia : A Leader in the Islamic Capital Market
Malaysia has been able to diversify its market-based funding avenues by developing its Islamic capital market (ICM), particularly the Sukuk segment. The country’s ICM expanded from RM294 billion in 2000 to RM2.035 trillion as at December 2019.
According to the Global Islamic Economy Report 2019/2020, Malaysia continues to be the main driver for the Sukuk market, representing 47.5% of the total global outstanding Sukuk as at end of February 2020 and 34% of the total global Islamic fund assets under management (AuM) as of December 2019. As of January 2020, the Malaysian Islamic market capitalisation is at RM 2.001.77 billion or 63.46% of the total Malaysian capital market. Malaysia ranked first with a total of 430 global funds followed by Saudi Arabia, Luxembourg and Pakistan.