UNPREDICTABLE market conditions have sapped investors’ appetite for initial public offerings (IPO), prompting some companies to delay their listing plans.
According to the report, gross funds raised by the private sector through the domestic equity market recorded a double-digit decline of 91.1% to RM0.9bil during the period following lower IPOs which declined 92.2% due to cautious market sentiment.
Nevertheless, funds raised through new corporate bond issuances increased 4.7% to RM59.8bil.
The bulk of new issuances were medium term notes, accounting for 94.7% of total corproate bonds.
The majority of funds were raised by the finance, insurance, real estate and business services sector, accounting fo 68.7% of new corporate bond issuances.
The funds were mainly used to finance infrastructure projects and working capital.
Gross funds raised in the capital market decreased 2.4% to RM131.4bil during the first seven months of 2018. This was due to lower fund-raising activity by the private sector with gross funds raised declining 9.7% to RM60.7bil.
On the back of higher investment activities, fund raising in the capital market is expected to improve next year.
Meanwhile, gross funds raised by the public sector increased 4.8% to RM70.7bil in the first seven months.
The issuance of Malaysian Government Securities (MGS) increased to RM35.4bil, while Malaysian Government Investment Issues (MGII) rose to RM35.2bil.
The government bonds continued to receive strong support from local institutional and foreign investors. As at end July 2018, share of resident and non-residents holdings of MGS stood at 59.5% and 40.5% of total MGS outstanding, respectively.
During the same period, share of resident and non-residents holdings of MGII stood at 95.3% and 4.7% of total MGII outstanding, respectively.
The equity market remained resilient and continued to record gains despite heightened trade tensions and global monetary tightening during the first eight months of 2018.
The FBM KLCI started to pick up in the first week of January 2018 and continued its positive trend. The uptrend was supported by an increase in OPR by 25 basis points leading to buying interest in finance-related stocks, resulting in the index surging to 1,870.52 on Jan 29, 2018.
Despite the US Federal Reserve raising interest rates for the first time this year, the FBM KLCI continued to increase and closed at 1,876.87 points on March 22, 2018, the highest level since Aug 2014.
Meanwhile, the local bourse rose to a new high og 1,895.18 points on April 19, 2018. The positive sentiment was largely driven by recovery in global crude oil prices.
The FBM KLCI advanced to 1,819.66 points as at end-August 2018, supported by sound macroeconomic fundamentals, growth of the corporate sector and the inflow of foreign funds into the equity market.
In terms of trading activity, total volume for the first eight months of 2018 rose 9.6% to 468.8 billion units. Meanwhile, total market transacted value increased 11.8% to RM454.2bil. Average daily trading volume and value increased to 2.9 billion units and RM2.8bil, respectively.
Market velocity was sustained at 34.3% while market volatility was at 8.3%. Foreign holdings based on market capitalisation in the local bourse stood at 23.6% as at end-August 2018.
In 2019, the domestic equity market is expected to continue to record gains despite external headwinds due to a confluence of factors including concerns over election outdcomes in the euro area as well as heightened trade and geopolitical tensions.
Meanwhile the Islamic banking industry continued to record strong growth in 2018. Total assets expanded 11.5% amounting to RM687bil as at end-July 2018, The expansion was mainly driven by financing to the household sector.
Total deposits of the Islamic banking system registered a strong growth of 12.6% to RM507.1bil as at end-July.
The outlook of Islamic banking is expected to remain favourable given strong demand from both households and businesses for syariah-based financial products and services.
