Page 94 - 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 (Continued)

The continued growth and more diversified structure of the economy has increased the funding requirement for
domestic businesses, with the debt capital market developing to become an important alternative for business financing,
complementing bank credit. Corporate bonds accounted for 45% of total business financing in Malaysia as at end 2017,
compared to only 8.8% in 1993.

Pension funds, insurance companies and other institutional investors have also played an important role in mobilising
savings by investing in the domestic capital market. This has allowed the capital market to continue to provide long-term
financing – with the thrust more pronounced in corporate bond issuances – for businesses to fund their activities and for
the country’s long-term economic development, including managing infrastructure development needs. The bond market
has contributed to more than half of the private-sector infrastructure investments since the early 1990s. The increase in
investment is characterised by the secular increase in gross fixed capital formation (GFCF) over the years (Chart 12).

Chart 12
The Malaysian capital market continued to grow in importance, providing finance and mobilising
capital to support economic development

Business financing extended via the Trends of nominal GFCF (1,2) and total funds
banking system and corporate bonds raised moving in tandem

1,400 350 120
Corporate bonds share of total financing:
1993: 8.8%
1,200 2017: 45.0% 300 100

1,000 250
80
RM billion 800 RM billion 200 60 RM billion

600
150
40
400 100

200 50 20
0 0 0
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 1993 1996 1999 2002 2005 2008 2011 2014 2017

Banking system Corporate bonds Total GFCF 5Y Total funds raised
moving average 5Y moving average
(LHS) (RHS)
Notes:
1 The 5-year moving average illustrates the direction of the trend for each category.
2 Total GFCF refers to private and public investment in fixed assets in the services, manufacturing, mining & quarrying, agriculture, and construction sectors. It
includes land improvements; plant, machinery and equipment purchases; and the construction of roads, railways and buildings.

Source: SC, BNM, Department of Statistics Malaysia (DOSM)

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