Roadmap to a vibrant capital market

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid, (pic) for one, finds it encouraging that the CMP3 addresses the financing needs of companies across various growth cycles.

FINANCIAL industry players are generally positive on the strategic initiatives highlighted under the third Capital Market Masterplan (CMP3).

They view the five-year roadmap as a potential game changer that can catapult the Malaysian capital market into the next level of growth and dynamism, thereby supporting the country’s transition into a more developed country.

Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid, (pic) for one, finds it encouraging that the CMP3 addresses the financing needs of companies across various growth cycles.

“Entrepreneurship is a key catalyst of sustainable economic growth, as it promotes the creation of high-quality jobs that can absorb local talent.

“If we can do it right, the country could, over time, reduce its dependency on foreign labour,” he tells StarBizWeek.

“CMP3 would complement the promotion of entrepreneurial activities in the private sector by addressing their financing gaps,” he says.

From the investors’ point of view, Mohd Afzanizam says, CMP3 allows alternative investments with different degrees of risk/return to grow.

“This is especially important, as the lower-for-longer interest rate environment is expected to persist in the future. As such, the CMP3 would create a win-win platform for both businesses and investors in a healthy ecosystem,” he explains.

Stashaway Wong Wai  KenStashaway Wong Wai Ken

Coming from the robo-advisory sector, StashAway country manager for Malaysia, Wong Wai Ken, (pic above) welcomes the CMP3 as it recognises the potential of digital investment managers in providing better investment advice and access to global markets. “One such initiative is liberalising the set of Private Retirement Scheme or PRS providers to include robo-advisers to further expand the already-successful retirement scheme,” Wong says.

“We look forward to deepening our reach to service more investors and help them reach their long-term goals,” he adds.

Launched over the week, the five-year CMP3 will set the direction for the Malaysia’s capital market from 2021 to 2025.

The comprehensive plan covers the development across various sectors from angel financing and equity crowd funding to the equity and bond markets.

It is noted that CMP3 comes with a shorter timeframe compared with the 10-year period for both CMP1 (2001-2010) and CMP2 (2011-2020). The reason is to give policymakers enough room to adjust according to the fast-changing and developing global financial system.

“The pace of development in the capital market has accelerated; there is now a greater level of uncertainty,” the Securities Commission says.

“We see five years as a balance – it is sufficiently ‘long term’ to develop the domestic capital market, and yet it enables us to be agile to respond to changing financial market,” the regulator explains at the recent media technical briefing on CMP3.A fund manager reckons that the shortening the timeframe for CMP3 is the right move.

“Ten years is a long time in finance. Things are moving so fast now; it will be hard to catch up with the trends in the global financial system if you are locked in a plan that has a long tenure,” argues the fund manager from a local financial institution.

“Overall, CMP3 appears relevant to what the country needs. But as always, it is all about implementation, and we will need to see what the subsequent policies or changes that will be rolled out under the CMP3 over the next five years are,” he adds.

Islamic finance

According to Principal Islamic Asset Management Sdn Bhd CEO Datuk Paduka Syed Mashafuddin Syed Badarudin, CMP3 could promote a more sustainable and inclusive market in Malaysia, while addressing the global megatrends and accelerating technological advancement.

He is also optimistic that the roadmap could further strengthen the country’s status as an Islamic capital market that is innovative and well-regarded globally.

“As an advocate of syariah-compliant investing, we are supportive of CMP3, as we see there is alignment and commonality between Islamic finance and ESG (environmental, social and governance) principles,” Syed Mashafuddin says.

“We are a firm believer in syariah-compliant investment and remains committed towards supporting and contributing towards the success of CMP3.

“We believe that shared responsibility and continuous engagement between regulators and industry players is vital in achieving the goals of CMP3,” he adds.

Fast-changing trends

The size of Malaysia’s capital market grew to RM3.4 trillion under CMP2 from RM2 trillion at the start of 2011.

AmBank Research notes that the CMP3 initiatives are in line with future economic trend, citing the focus on addressing the business funding gap through a diverse market and intermediation ecosystem; digital inclusion as the economy moves towards digitalisation; shared accountability, especially on corporate responsibility to stakeholders beyond short-term profitability; and sustainability and ESG through higher mobilisation of capital.

AmBank AnthonydassnAmBank Anthonydassn

AmBank Group chief economist Anthony Dass (pic above) says the successful implementation of the CMP3 over the next five years will put Malaysia on a higher pedestal among global capital markets.

“With greater efficiency and a more inclusive and diverse capital market, Malaysia would be able to garner more investor interest and better valuations, and these in turn would benefit our businesses and the economy,” he points out.

The strategic initiatives under CMP3 are guided by six key development and regulatory priorities.

These strategic thrusts focus on catalysing competitive growth, empowering investors for a better future and shaping a stakeholder economy, while simultaneously embedding shared accountability, prioritising efficiency and outcomes, as well as embracing technology. Overall, these priorities are aimed at ensuring that the capital market achieves three desired outcomes – relevant, efficient and diversified.

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