Malaysia's fundraising activities to stay resilient in 2022: Securities Commission

Kuala Lumpur

MALAYSIA'S fundraising activities are expected to remain resilient this year, with an estimated 35 initial public offerings (IPOs) coming on stream, said Securities Commission (SC) Malaysia executive chairman Syed Zaid Albar on Monday (Mar 28).

"Fundraising through the domestic capital market will continue to pick up, as the economic activities normalise. Despite the challenging environment, fundraising activities have been encouraging," he said at a media conference in conjunction with the release of the SC's latest annual report.

Total funds raised in the capital market rose 14.3 per cent to RM130.9 billion (S$42.3 billion) in 2021, its highest level since 2019 when RM139.4 billion was raised.

The country recorded 29 IPOs and raised a total of RM2.3 billion in 2021.

So far this year, 5 companies have made their debut on Bursa Malaysia, including electrical and electronics retailer Senheng New Retail and dairy producer Farm Fresh. This Friday (Apr 1), pawnshop operator Pappajack will make its debut on the local bourse.

Syed Zaid remained cautious on the outlook of the global markets, partly due to the ongoing Russian-led war in Ukraine.

"Moving forward, market conditions are expected to remain challenging on the back of the current geopolitical situation, alongside uncertainty surrounding continued evolution of the pandemic and the timing and pace of the global monetary policy normalisation," he said.

Even though Bursa Malaysia has recorded foreign funds outflow of RM12.64 billion from 2018 to 2021, Syed Zaid remained optimistic on the overall long-term outlook of the capital market, backed by the implementation of its Capital Market Masterplan 3, which was launched last September.

He noted that the current foreign investors' participation rate is around 20.5 per cent of the total market capitalisation, which is higher than the lowest level of 18 per cent recorded 20 years ago in 2002.

"In fact, between Jan 1 and Mar 21 (this year), we have recorded foreign funds inflow of over RM5.59 billion," he said.

Malaysia's capital market rose 3 per cent to RM3.5 trillion in 2021, as the country's bond market growth offset the decline in the equity market.

According to Syed Zaid, the total bonds outstanding grew to RM1.7 trillion in 2021, up 6.25 per cent from RM1.6 trillion in 2020, while the overall market capitalisation of the country's equity market fell 1.65 per cent at RM1.79 trillion.

The growth in 2021 was slower than the 7 per cent growth recorded the previous year.

"Heading into 2021, expectations were high that the global economy would be able to emerge from pandemic uncertainties and transition to normalcy. But the past year turned out to be equally challenging as the previous year, necessitating continued regulatory and policy support," Syed Zaid said.

"However, it is comforting that our market participants remained resilient in the face of market uncertainties."

He also said that alternative financing, which includes fundraising from private equity, venture capital, peer-to-peer (P2P) financing and equity crowdfunding (ECF), "continued to gain traction, especially in supporting the funding needs of micro, small and medium enterprises (MSME)", as it rose 149.2 per cent in 2021 to RM2.4 billion.

The ECF and P2P financing markets have raised a total of RM2.7 billion and benefitted over 4,000 MSMEs since their inception in 2015 and 2016, respectively.

"While still relatively small in size, these alternative financing avenues had grown to become a viable source of financing for MSMEs, increasing their reach to small and emergent companies," said Syed Zaid.

In particular, ECF and P2P financing had helped to address the financing needs of MSMEs during the pandemic, as both markets had raised more than RM1.8 billion since the start of (the country's) Movement Control Order in 2020," he added.