Page 24 - CMP3

1.2.2 ENHANCED EQUITY AND BOND MARKETS
Over the last decade, most global jurisdictions, including Malaysia, saw an overall decline in initial public offerings (IPOs), as more companies chose to stay private for longer as a result of greater liquidity in private markets, thus affording them greater control and flexibility.
Notwithstanding these trends, the mid and small cap (MidS) segment of the equity market has seen a higher number of IPO listings and increased trading activity, as reflected in Chart 7. The increase in IPO listings by MidS companies was enabled by initiatives such as the establishment of the LEAP market and an enhanced listing transfer framework from the ACE market to the Main Market5. Improved trading activity had in part been enabled by better research coverage through the MidS Research Scheme, lower trading costs with the MidS-specific stamp duty waiver and greater liquidity arising from the various MidS-related indices as well as index futures.
The corporate bonds and sukuk market continued to be a strong fundraising avenue over the last decade, with the outstanding amount growing by 8.9% CAGR to RM732.4 billion in 2020. Share of corporate bonds and sukuk over total issuances increased to 28.5% from 13.0% in 2010. This growth was built on facilitative policies, which strengthened local credit rating capabilities as well as enhanced fundraising flexibilities with liberalised limits and credit rating requirements. To improve liquidity in the secondary market, the SC introduced regulated short selling for corporate bonds and facilitated direct retail participation within the bonds and sukuk market. (Chart 8)
Rapid developments in technology offered electronic solutions to enable growing demand. Together with the increase in the number and types of alternative fundraising platforms, traditional public fundraising channels were also enhanced for greater efficiency. Thus, the operational efficiency of the market infrastructure improved with greater flexibilities for online account openings, the digitisation of corporate actions, as well as the post-trade and settlement process. In line with global best practices, Bursa Malaysia enhanced securities trading efficiency with the introduction of the T+2 settlement cycle. These measures assisted in reducing costs and market friction for participants.
1.2.3 BROADENED INVESTMENT OPTIONS AND INTERMEDIATION CHANNELS
Today, investors in the Malaysian capital market have a diverse range of trading and investment options. At the higher end of the risk spectrum, investors are able to invest in digital assets, derivatives products such as contracts for difference (CFDs), as well as participate in the growth of Malaysian MSMEs through the stock market and ECF platforms. More risk-averse investors can invest in smaller-ticket retail bonds and sukuk, explore new strategies with unit trusts and exchange-traded funds (ETFs), and embrace value-based investing with environmental, social and governance (ESG)-focused funds.
The evolution of the investment needs of Malaysian investors generated significant growth in the industry AUM and brought changes to the Malaysian investment landscape, including greater diversity in product range and better intermediation capacity. As a result, AUM grew at a compounded pace of 9.1% p.a. from RM377.5 billion in 2010 to RM905.5 billion in 2020 (Chart 9).
An enhanced transfer process for ACE Market counters to move to the Main Market was introduced in tandem with the revision
5
in the SC’s Equity Guidelines in 2013.
22 SECURITIES COMMISSION MALAYSIA