Page 93 - SC Annual Report 2018 (ENG)

Securities
Commission
Malaysia
ANNUAL
REPORT
2018

GrOWtH OF tHE MaLaYSIaN CaPItaL MarKEt IN tHE LaSt 25 YEarS:
MOBILISING FINaNCIaL rESOUrCES FOr ECONOMIC DEVELOPMENt

In the economic development of a country, the financial system plays an essential role in mobilising financial resources for
business activities and long-term investment for future growth. This includes the capital market, which typically grows in
importance as an economy becomes more developed.

The size of the Malaysian capital market was at RM699.5 billion when the Securities Commission Malaysia (SC) was
established in 1993. Since then, it has increased by 4.4 times over the past 25 years – notwithstanding the adverse
impacts of the 1997-98 and 2007-08 financial crises – to RM3.1 trillion as at end-2018 (Chart 11). Importantly, the capital
market has also expanded its funding capacity from mainly equity financing to include debt financing. The bond market
grew at a compound annual growth rate (CAGR) of 12.1% per annum (p.a.) since 1993 to account for 45.3% of the
Malaysian capital market in 2018 (1993: 11.6%). The ringgit bond market is the third largest as a percentage of GDP in
Asia after Japan and South Korea, and the second largest in terms of absolute size in ASEAN after Thailand.

The growth in market-based financing was in line with the structural change in the Malaysian economy, particularly
following the 1997-98 Asian financial crisis. Malaysia has also been able to diversify its market-based funding avenues
by developing the Islamic capital market (ICM), particularly the sukuk segment. Malaysia’s ICM expanded at a CAGR of
10.9% p.a. from RM294 billion in 2000 to RM1.9 trillion as at end 2018. Sukuk continued to comprise the majority of
domestic bonds outstanding in 2018, making Malaysia the largest sukuk market in the world.

Chart 11
The Malaysian capital market grew 4.4 times over the past 25 years, at a CAGR of 6.1% p.a.

2,000
1,800
1,600
1,400 Establishment of the SC Asian financial crisis Global financial crisis
RM billion 1,200

1,000
800
600
400
200
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Equity market capitalisation Debt securities outstanding

Source: SC, BNM

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