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MALAYSIA
CAPITAL MARKETS MALAYSIAMalaysia enjoys an enviable market leading position in the global capital market with its spectrum of unique offerings. In the fixed income market, Malaysia has the largest bond market in ASEAN and is amongst the top three countries with the highest bonds outstanding in Asia. Home to the highest number of public listed companies (PLCs) in ASEAN, Malaysia also hosts the largest unit trust industry and continues to lead the market in the global sukuk market. In recognition of the significant achievements in the Malaysian capital market, Malaysia was upgraded to an Advanced Emerging Market in the FTSE Global Equity Index Series in 2013. Against this backdrop, Capital Markets Malaysia (CMM) was established by the Securities Commission Malaysia to optimise further development and internationalisation of Malaysia’s capital market. CMM focuses its efforts on the four primary pillars of the market: Equities, Fixed Income, Asset Management and Alternative Assets. Furthermore, CMM highlights the importance and relevance of the Islamic Capital Market (ICM) and Sustainable and Responsible Investment (SRI) framework which cut across all pillars and market segments to enable the expansion of the spectrum of product offerings to issuers and investors in the Malaysian capital market. As one of the most developed economies in Southeast Asia, Malaysia offers many opportunities for capital market investment growth. A strong governance infrastructure, coupled with intuitive government support, enables an efficient marketplace that has naturally become a global marketplace for niche areas like fixed income and Islamic capital products. Moreover, Malaysia’s leading role in the development of the ASEAN regional bloc and the Trans-Pacific Partnership (TPP), presents an opportunity for strong growth potential in the near future. Accordingly, the Malaysian market is an ideal platform for PLCs and small- to medium-sized companies seeking innovative and wide-reaching modes of capital formation. Investors, in turn, can be confident of generating sustainable long-term investment returns that will be driven by stable long-term growth prospects in the commodities, manufacturing and services industries. Lastly, a growing region driven by a young population and exponential growth potential makes Malaysia and ASEAN a favourable choice compared to more mature markets. The sustainable, inclusive and innovative nature of the Malaysian capital market is poised to continue to optimise economic growth. CMM leads the charge in positioning Malaysia as one of the world’s favoured destinations for investments and fundraising by providing valuable insights from authorities while supporting issuers and investors in accessing the full spectrum of instruments andmaintaining an independent dedication to industry advancement.
SECURITIES COMMISSION MALAYSIA (SC) The Securities Commission Malaysia (SC), a statutory body reporting to the Minister of Finance, Malaysia, was established under the Securities Commission Act 1993. It is the sole regulatory agency for the regulation and development of capital markets. The SC has direct responsibility for supervising and monitoring the activities of market institutions, including the exchanges and clearing houses, and regulating all persons licensed under the Capital Markets and Services Act 2007. More information about the SC is available on its website at www.sc.com.my.
CAPITAL MARKETS MALAYSIAMalaysia enjoys an enviable market leading position in the global capital market with its spectrum of unique offerings. In the fixed income market, Malaysia has the largest bond market in ASEAN and is amongst the top three countries with the highest bonds outstanding in Asia. Home to the highest number of public listed companies (PLCs) in ASEAN, Malaysia also hosts the largest unit trust industry and continues to lead the market in the global sukuk market. In recognition of the significant achievements in the Malaysian capital market, Malaysia was upgraded to an Advanced Emerging Market in the FTSE Global Equity Index Series in 2013. Against this backdrop, Capital Markets Malaysia (CMM) was established by the Securities Commission Malaysia to optimise further development and internationalisation of Malaysia’s capital market. CMM focuses its efforts on the four primary pillars of the market: Equities, Fixed Income, Asset Management and Alternative Assets. Furthermore, CMM highlights the importance and relevance of the Islamic Capital Market (ICM) and Sustainable and Responsible Investment (SRI) framework which cut across all pillars and market segments to enable the expansion of the spectrum of product offerings to issuers and investors in the Malaysian capital market. As one of the most developed economies in Southeast Asia, Malaysia offers many opportunities for capital market investment growth. A strong governance infrastructure, coupled with intuitive government support, enables an efficient marketplace that has naturally become a global marketplace for niche areas like fixed income and Islamic capital products. Moreover, Malaysia’s leading role in the development of the ASEAN regional bloc and the Trans-Pacific Partnership (TPP), presents an opportunity for strong growth potential in the near future. Accordingly, the Malaysian market is an ideal platform for PLCs and small- to medium-sized companies seeking innovative and wide-reaching modes of capital formation. Investors, in turn, can be confident of generating sustainable long-term investment returns that will be driven by stable long-term growth prospects in the commodities, manufacturing and services industries. Lastly, a growing region driven by a young population and exponential growth potential makes Malaysia and ASEAN a favourable choice compared to more mature markets. The sustainable, inclusive and innovative nature of the Malaysian capital market is poised to continue to optimise economic growth. CMM leads the charge in positioning Malaysia as one of the world’s favoured destinations for investments and fundraising by providing valuable insights from authorities while supporting issuers and investors in accessing the full spectrum of instruments andmaintaining an independent dedication to industry advancement.
SECURITIES COMMISSION MALAYSIA (SC) The Securities Commission Malaysia (SC), a statutory body reporting to the Minister of Finance, Malaysia, was established under the Securities Commission Act 1993. It is the sole regulatory agency for the regulation and development of capital markets. The SC has direct responsibility for supervising and monitoring the activities of market institutions, including the exchanges and clearing houses, and regulating all persons licensed under the Capital Markets and Services Act 2007. More information about the SC is available on its website at www.sc.com.my.
Services
Manufacturing
Mining
Agriculture
Construction
Others
Electrical & Electronic Products
Oil & Gas Products
Chemical & Chemical Products
Palm Oil
Manufactures of Metal
Optical & Scientific Equipment
Rubber Products
Other Products
Machinery, Appliances & Parts
MALAYSIA’S ECONOMY
Malaysia has a diversified economy and is a leading exporter of electrical appliances, electronic parts and components, palm oil, and natural gas.
Malaysia has matured from an emerging market into an advanced emerging market, creating niche areas of expertise and providing stable long-term growth.
With Malaysia’s chairmanship of ASEAN and the establishment of the ASEAN Economic Community (AEC) in 2015, economic integration amongst ASEAN members will be a key focus with a target for a single market and production base, which will provide ample growth opportunities for investors in Malaysia within and beyond the ASEAN community.
DIVERSITY
STABILITY
OPPORTUNITIES
2.6%3.3%4.5%
4.6%
5.1%
7.1%
16.3%
20.9%
35.6%53.5%
23.0%
8.9%8.8%
4.4%
1.4%
GDP by SectorRM1,063 billion(2015)
Building on the strength of a globally competitive manufacturing base, Malaysia has now realigned itself into a service-driven economy.
Major ExportsRM780 billion(2015)
Historically a commodities-driven economy, Malaysia now has a balanced export portfolio. Malaysia’s commodities industry exports account for only 26% of total exports.
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Global RankingsMalaysia continues to be globally recognised as a competitive business focused country.
GDP Annual GrowthMalaysia’s GDP growth outpaced ASEAN-5 GDP growth rate in the last 2 years.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
1200
1000
800
600
400
200
0
523 526 555 587626 660 697
741776 765
821865
912955
1,0131,063
Malaysia GDP (RM billion) Malaysia GDP growth (%) ASEAN-5 GDP growth (%)
4th World BankMinority Investor Protection, 2015
4th IMD World Talent Report Ranking, 2015
14th IMD World Competitiveness, 2015 18th WEF Global Competitiveness
Report, 2015
18th World BankDoing Business, 2015
Note:(1) 2015 ASEAN-5 GDP growth is an IMF estimate(2) Malaysia GDP (RM billion) and all GDP growth rates at constant 2010 prices
(continued from previous page)
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Global RankingsMalaysia continues to be globally recognised as a competitive business focused country.
GDP Annual GrowthMalaysia’s GDP growth outpaced ASEAN-5 GDP growth rate in the last 2 years.
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
-2.0%
-4.0%
1200
1000
800
600
400
200
0
523 526 555 587626 660 697
741776 765
821865
912955
1,0131,063
Malaysia GDP (RM billion) Malaysia GDP growth (%) ASEAN-5 GDP growth (%)
4th World BankMinority Investor Protection, 2015
4th IMD World Talent Report Ranking, 2015
14th IMD World Competitiveness, 2015 18th WEF Global Competitiveness
Report, 2015
18th World BankDoing Business, 2015
Note:(1) 2015 ASEAN-5 GDP growth is an IMF estimate(2) Malaysia GDP (RM billion) and all GDP growth rates at constant 2010 prices
(continued from previous page)
Capital Market
Equity Market
Fixed Income Market
Islamic Capital Market
RM2.04 trn
RM1.28 trn
RM0.76 trn
RM1.05 trn
RM2.82 trn
RM1.70 trn
RM1.12 trn
RM1.70 trn
2010
2015
USAUS SEC Approval:“Designated Offshore Securities Market” recognition to ease trading in Malaysian listed securities & bonds by US investors
CFTC Approval:Approval from US Commodity Futures Trading Commission (CFTC) to enable Malaysian Futures brokers to deal with US customers
Approval from US CFTC to attract US-based commodity traders into our Derivatives Market via direct market access
Malaysia and Dubai Islamic Collective Investment Schemes MRA
Dubai Financial Services Authority (DFSA) and Malaysia signed an MRA facilitating cross border distribution and marketing of Islamic funds between Malaysia and the Dubai International Financial Centre (DIFC).
Malaysia – HK Islamic MRA
Malaysian capital market intermediaries will be allowed to distribute their Islamic products in Hong Kong’s financial hub with minimal regulatory intervention. Similarly, Islamic funds that are authorised and primarily regulated by the SFC and managed by SFC-licensed managers can now be marketed in Malaysia.
DUBAI
CBRC Recognition:
First emerging market to receive QDII Status
One of the first central banks to receive QFII Status
Received RQFII Status
CHINA
HONGKONG
CAPITAL MARKET OVERVIEW
A key measure of the capital market is the extent to which it facilitates capital formation as well as income growth through the ability of individuals to benefit from opportunities in the capital market, be it directly or indirectly.
The Malaysian capital market has evolved significantly over the years, building expertise in the asset management segment and reinforcing its lead in the fixed income segment through its niche position as a leader in Islamic capital market products. It is now steadfastly being recognised as an international marketplace for both investors and issuers.
Consistent and steady growth was registered in the overall Malaysian capital market in key categories.
Global ConnectionsThis sustained growth in the Malaysian capital market reflects a resilient and thereby stable market that is able to withstand global economic and financial challenges. In addition, regulators of the market have built international connectivity that further enhances the international perspective of the Malaysian market.
FTSE Upgrade:
Promoted to Advanced Emerging Market status in FTSE Global Equity Index Series
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Market Capitalisation in ASEAN
Other
Japan
Australia
Taiwan
Malaysia
China
348.8
238.8
51.9
353.3383.0
640.0
Singapore Exchange Bursa Malaysia Indonesia SE The Stock Exchangeof Thailand
Philippines SE HoChiMinh SE
EQUITY
Malaysian Equity Market Known for its Stability and ResilienceEach MSCI Risk Weighted index reweights all the constituents of a cap weighted MSCI parent index so that stocks with lower historical return variance are given higher index weights. By emphasizing low volatility stocks in this way, the MSCI Risk Weighted Indices historically produce higher return and lower realized volatility compared to their respective parent MSCI indices, while maintaining reasonable liquidity and capacity. In general, MSCI Risk Weighted Indices tend to have a bias towards stocks with lower volatility.
Other
South Korea
Australia
Taiwan
Malaysia
China
25%
34%
12%
8%
9%
12%
35%
10%
11%
16%
16% 12%
MSCI Asia Pacific Risk Weighted Index(as at 29 Feb 2016)
MSCI Asia Pacific ex Japan Risk Weighted Index(as at 29 Feb 2016)
(USD billion, as at 31 Dec 2015)
2nd largest equity market In Asean.
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Market Capitalisation in ASEAN
Other
Japan
Australia
Taiwan
Malaysia
China
348.8
238.8
51.9
353.3383.0
640.0
Singapore Exchange Bursa Malaysia Indonesia SE The Stock Exchangeof Thailand
Philippines SE HoChiMinh SE
EQUITY
Malaysian Equity Market Known for its Stability and ResilienceEach MSCI Risk Weighted index reweights all the constituents of a cap weighted MSCI parent index so that stocks with lower historical return variance are given higher index weights. By emphasizing low volatility stocks in this way, the MSCI Risk Weighted Indices historically produce higher return and lower realized volatility compared to their respective parent MSCI indices, while maintaining reasonable liquidity and capacity. In general, MSCI Risk Weighted Indices tend to have a bias towards stocks with lower volatility.
Other
South Korea
Australia
Taiwan
Malaysia
China
25%
34%
12%
8%
9%
12%
35%
10%
11%
16%
16% 12%
MSCI Asia Pacific Risk Weighted Index(as at 29 Feb 2016)
MSCI Asia Pacific ex Japan Risk Weighted Index(as at 29 Feb 2016)
(USD billion, as at 31 Dec 2015)
2nd largest equity market In Asean.
3,371 3,225 3,1433,553
3,9374,352
Malaysia Philippines Vietnam Indonesia Thailand Singapore
2010 2011 2012 2013 2014 2015
63%60%65% 61% 62% 65%
40% 37%35%
39% 38% 35%1,275 1,2851,466
1,702 1,651 1,695
5.9% CAGR 2010 - 2015
Shariah compliant
Non-Shariah compliant
Sectors Listed by Market CapUSD383 billion, 903 PLCs(Dec 2015)
Banks
Telco
Industrial Goods& ServicesF&B
Utilities
Oil & Gas Others
Healthcare
Travel & Leisure
ChemicalsConstruction & Materials
Real Estate Foreign
Domestic
Domestic/Foreign Ownership by Market Cap USD383 billion (Dec 2015)
22%
78%
Funds Raised from Secondary Market in ASEAN(USD billion, as at 31 Dec 2015)
Market Capitalisation(RM billion)
Bursa Malaysia Profile
Highest funds raised from secondary market in ASEAN.
65% of the market capitalisation is Shariah compliant.
Largest number of listed companies provides diversified exposure to varied industries.
Strong domestic presence in the market provides investors with stability against global volaitility.10%
7%
7%7%6%
5%
5%
4%
10%
11%
11%
17%
5
2010 2011 2012 2013 2014 2015
60%63%63% 59% 57%
37%40%
37%41%
43%
142178
229269 301
54%
46%
261
Government
Corporate
220%
130%
94%80% 73% 66% 56%
36%20% 15%
Japan South Korea Malaysia Singapore Thailand Hong Kong China Philippines Vietnam Indonesia
Overview of Asian Countries’ Fixed Income Market
Conventional
Sukuk
2005 2006 2007 2008 2009 2010 2011 2012 2013 20152014
71% 68% 64% 64% 61% 61% 58% 53% 50% 46%
418 453557 586 644
763 841
1,008 1,031 1,1251,110
48%29% 32%
36% 36% 39%39% 42%
47% 50% 54%52%
10.4% CAGR 2005 - 2015
Malaysia
Rest of the World
FIXED INCOME
(local currency bonds as a % of GDP, as at 30 Sep 2015)
Malaysian Fixed Income Market(RM billion)
Global Sukuk Market(USD billion)
3rd largest bond market in Asia & largest in ASEAN.
Phenomenal growth in the fixed income market due to the rapid expansion of the Malaysian sukuk market.
Malaysia consistently remains the leading international marketplace for Islamic fixed income fundraising.
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2010 2011 2012 2013 2014 2015
15%13% 16% 17% 18%
87% 85%84%
83% 82%377
424505
588 630
20%
80%
668
12.1% CAGR 2010 - 2015
AberdeenAsset
ManagementGoldman
SachsAmundi
Malaysia
NomuraAsset
Management
BNPParibasAsset
Management
ThreadneedleInvestments
FranklinTempleton
Investments
FUND MANAGEMENT
Islamic
Conventional
Assets under Management (AuM) Growth
International Industry Presence
(RM billion, as at 31 Dec 2015)
Global Islamic AuM by Domicile USD60.2 billion (as at 30 Sep 2015) industry with
phenomenal growth rate
Experience in both conventional and Islamic
Varied product investment experience
growth rate
20% of total AuM is Shariah compliant
Key international players have based operations out of Malaysia since 2005.
Unit Trust
Corporate
EPF
Wholesale
Individual
Private Pension
Charitable Bodies
Others
13%
15%
52%
0.6%0.1%
7%1%
12%
AuM Asset AllocationRM668 billion(as at 31 Dec 2015)
2nd largest Islamic AuM globally.
5%
41%
2%
6%
2%2%
28%
5%9%
Luxembourg
USA
Jersey Island
Pakistan
Malaysia
South Africa
Kuwait
Saudi Arabia
Others
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ISLAMIC CAPITAL MARKET
Islamic Equity
The leading exchange in ASEAN for Shariah compliant investment
Global leader in Shariah compliant unit trust
Market Cap
Sukuk
Total Islamic Assets(RM billion)
listed companies are Shariah compliant
74%market capitalisation of Shariah compliant
stocks
64%
Sukuk Islamic Unit Trust
market share of global sukuk
outstanding
54%market share
of global sukuk issuance
53%Net Asset
Value
RM52bShariah compliant unit trust funds
launched
193
2010 2011 2012 2013 2014 2015
70%72% 67% 67% 64% 64%
28% 30%33%
33% 36%36%
1,0531,160
1,4221,557 1,604
1,694
10.0% CAGR 2010 - 2015
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ISLAMIC CAPITAL MARKET
Islamic Equity
The leading exchange in ASEAN for Shariah compliant investment
Global leader in Shariah compliant unit trust
Market Cap
Sukuk
Total Islamic Assets(RM billion)
listed companies are Shariah compliant
74%market capitalisation of Shariah compliant
stocks
64%
Sukuk Islamic Unit Trust
market share of global sukuk
outstanding
54%market share
of global sukuk issuance
53%Net Asset
Value
RM52bShariah compliant unit trust funds
launched
193
2010 2011 2012 2013 2014 2015
70%72% 67% 67% 64% 64%
28% 30%33%
33% 36%36%
1,0531,160
1,4221,557 1,604
1,694
10.0% CAGR 2010 - 2015
USD5 billion
RM60 billion
RM1 billion
SGD600 million
USD800 million
RMB500 million (RM246 million)
7x oversubscribed, USD300 million
5.4x oversubscribed, RM1.8 billion
2x oversubscribed, USD600 million
RM125 million
USD500 million
RM800 million
RM30.6 billion
USD357.8 million
RM1 billion
6x oversubscribed, USD750 million
USD150 million
RM500 million
Malaysia is a Leader in Several Islamic Capital Initiatives
2015
2014
2013
2012
2011
2008
2007
2006
2005
2004
2002
2001
1990
Note:‘Emas’ is Malaysia’s designation for foreign currency denominated bonds and sukuk originating from Malaysia in the global capital market.
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www.capitalmarketsmalaysia.com
Capital Markets MalaysiaUnit 14-6, Level 14, Wisma UOA Damansara II6 Changkat Semantan, 50490 Kuala Lumpur, Malaysia
Tel +603 2091 0667Fax +603 2091 0668
SOURCES
The various statistical and other information cited in this publication was gathered from international financial and economic institutions, national statistical offices and other publicly available industrial intelligence services. Principal sources for the Capital Markets Malaysia factsheet include Securities Commission Malaysia (SC), Bursa Malaysia, Bank Negara Malaysia (BNM), The World Federation of Exchanges (WFE), Malaysian External Trade Development Corporation (MATRADE), International Monetary Fund (IMF), World Bank Group and AsianBondsOnline (ADB).