News & Events

[ 08-07-2013 ]
Malaysia's capital market triples to RM2.5tril

PETALING JAYA: The size of Malaysia’s capital market has more than tripled to RM2.5 trillion since 2000, equivalent to 264% of the country’s gross domestic product, according toSecurities Commission (SC) deputy chief executive Datuk Nik Ramlah Mahmood.

The local market’s outstanding sukuk and debt securities stood at RM1 trillion against Bursa Malaysia’s market capitalisation of RM1.6 trillion, which is comparable to major markets in the region, she said in her keynote speech at the Malaysia Investor Relations Awards 2013 yesterday.

“There have been seismic shifts in the structure and balance of global financial power. Many rapidly developing economies are moving up the ranks of global economic power and are seeing tremendous growth in their financial and capital markets,” Nik Ramlah said.

The Employees Provident Fund, with RM536.5bil in assets and funds under management, was the sixth-largest pension fund in the world, she said.

“As companies advance their corporate footprints beyond national borders and evolve into regional and global champions, is there room or opportunity for smaller companies, the so-called emerging corporate gems? Indeed there is.

“In fact, it is the smaller companies and businesses that are the driving force behind many economies across the globe by creating jobs, generating wealth and stimulating supply-chain demand,” she told audience members.

The United States, she said, has identified small businesses as the engine of growth for the world’s No. 1 economy, while small-to-medium enterprises (SME) account for 99.8% of all non-financial enterprises in the European Union and some 97.3% of businesses in Malaysia.

Towards this end, the regulator is facilitating access to financing for SMEs via MyULM, to be set up soon as a virtual trading platform for unlisted companies, she explained.

“MyULM would enable small businesses to raise funds to finance their growth, thus preparing them for eventual listing either on the ACE Market or the Main Market of Bursa.

“For companies that have reached a size appropriate for the public market, the ACE Market, which now has 110 listed companies, provides them with a first avenue for listing. Successful ACE companies can then move on to the Main Market,” Nik Ramlah said, adding that 13 ACE Market companies had qualified and been transferred to the main board during the past four years.

“The framework that is in place, thus, provides fund-raising opportunities to ensure that small companies can continue to grow. Yet, when we rank the over 900 companies listed on Bursa according to market capitalisation, we find that the bottom 50% of the list make up only 1.62% of Bursa’s market capitalisation, while the top-10 companies account for a whopping 85%.

“There is, thus, tremendous room for companies on the lower half of the scale, the small-to-medium-cap companies, to grow further with proper nurturing and good governance practices,” she noted.

Nik Ramlah remarked that the financial needs of smaller firms were also being met by the growth of the venture capital (VC) industry, which has seen its fund size increase to RM5.7bil last year from RM2.1bil in 2003.

The number of VC investee companies also rose in tandem to 466 from 298 during the period.

“As these small businesses grow, so do their funding requirements. The capital market is, of course, one important venue for capital raising, and over the years, the SC has sought to ensure that there are different products and funding mechanisms, through equity and debt, that cater for companies at every stage of their growth,” Nik Ramlah said.