Securities Commission chairman Datuk Seri Ranjit Ajit Singh
KUALA LUMPUR: The Securities Commission (SC) expects fundraising activities through the capital market to total around RM102bil-RM105bil this year, an improvement from the RM98.5bil raised in 2016.
According to the capital market regulator, of the estimated total capital to be raised this year, RM85bil would be from the corporate bond and sukuk market, while the equity market would likely see RM7bil-RM9bil raised from initial public offerings and RM10bil-RM11bil from the secondary market.
SC chairman Tan Sri Ranjit Ajit Singh said the outlook for the capital market in 2017 reflected increased optimism, underpinned by renewed interest in emerging markets and sustained domestic GDP growth expectations.
"We expect higher levels of fundraising in 2017, with current estimates of between RM102bil and RM105bil while at present the size of the capital market has also increased to RM2.97 trillion," Ranjit said at a briefing on SC's 2016 Annual Report here on Thursday.
The SC noted the overall outlook for the Malaysian capital market was positive, with higher levels of growth expected across key market segments.
"This is underpinned by higher levels of corporate activity within a backdrop of sound economic fundamentals in place to support consistent growth outlook,” the SC said in its report.
The SC expected the equity market to attract some foreign inflows, while the bond market would likely see some outflows on continued external uncertainties.
“Against prevailing global uncertainties, the low beta nature of the capital market coupled with better dividend yields relative to regional peers represents an attractive portfolio diversification opportunity,” the SC said.
“Foreign shareholding in the equity market is at present in line with its long-term averages, with expectations of some inflows, assuming clarity in the global policy environment and an improvement in emerging market interest on the part of global investors,” it added.
According to the SC, the current level of the ringgir, widely perceived to be undervalued, would present an opportune time for foreign investment in the domestic equity market.
The SC noted the equity market would likely see earnings growth regain momentum this year in line with the roll out of more infrastructure projects, better economic fundamentals and improving liquefied natural gas prices in tandem with higher crude oil prices.
In particular, it said, market consensus was positive for the oil and gas, plantation and construction sectors.
As for the bond market, however, the SC said there could be some fund outflows in line with the overall performance of global emerging market bonds given external factors.
“But it should be mitigated by sound domestic economic fundamentals and domestic liquidity.
“Despite having relatively high levels of foreign ownership, the profile of a majority of investors in the bond market suggest holdings are long-term investors and thus should provide stability to foreign ownership levels,” the SC said.
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