KUALA LUMPUR: Malaysia’s capital market reached a significant milestone in 2024, surpassing the RM4 trillion threshold, driven by strong domestic fundamentals that helped overcome complex and multifaceted global economic challenges.
As of October 2024, the bond and sukuk market reached RM2.09 trillion, while the total market capitalisation of securities listed on Bursa Malaysia amounted to RM2 trillion, surpassing the RM2 trillion mark for the first time in May.
The total equity market capitalisation and bonds/sukuk outstanding continued to grow, fuelled by domestic reforms and economic growth forecasts of between 4.8% and 5.3% this year.
However, export-driven sectors remained vulnerable to external shocks such as subdued global trade recovery, geopolitical tensions and structural realignments in global supply chains, said Mohd Sedek Jantan, UOB Kay Hian Wealth Advisors (UOBKHWA) head of investment research.
He noted that these factors underscored the capital market’s sensitivity to external demand volatility, particularly as global trade adapts to nearshoring trends. Global market volatility is escalating as more central banks recalibrate monetary policies.
“While advanced economies are nearing the end of their tightening cycles, policy divergences in emerging markets to stabilise currencies or counter inflation contribute to heightened uncertainty in global financial markets.
“Adding to this complexity is the number of elections in key economies, such as the United States, India and several European Union nations, which significantly shift foreign policies and trade alliances,” he said.
IPOs soar in 2024
Additionally, Bursa Malaysia surpassed its 42 initial public offerings (IPOs) target for 2024, having seen 52 companies listed as of Dec 16.
Eleven listings were on the Main Market, near a 10-year record, while 37 IPOs joined the ACE Market, the highest since 2005.
The remaining four IPOs were on the LEAP Market.
Bursa Malaysia Bhd
chairman Tan Sri Abdul Wahid Omar reportedly said the last time 40 listings were achieved was in 2006.
With more IPOs in the pipeline, Malaysia is on track to reach 55 listings by year-end, continuing to outperform its South-East Asian peers in terms of IPO count.
Some RM5.33bil was also raised via the secondary fundraising market.
Abdul Wahid is optimistic about the outlook for 2025, citing a robust pipeline of IPOs and an active capital market.
FBM KLCI fares better than 2023
The FBM KLCI climbed 10.6% year-to-date to 1,608.75 as of Dec 13, compared to the 1,453.10 recorded on the first trading day in 2024.
In August, the benchmark index peaked at 1,678.80 points, a level last seen in December 2020.
Its overall performance is much stronger than last year’s, reflecting a positive trend in the stock market, despite the index’s underperformance relative to targets of 1,700 to 1,780 levels.
Amid mounting global trade uncertainties following Donald Trump’s US election victory, UOBKHWA lowered its year-end target for the FBM KLCI to 1,650.
Mohd Sedek emphasised that high-growth sectors like technology, healthcare and consumer discretionary should remain a focus, benefitting from robust domestic demand and supportive government initiatives, including measures under Budget 2024 and 2025.
“For those seeking stability amid market volatility, defensive sectors like utilities and dividend-paying stocks in the banking sector provide attractive options with stable yield,” he added.
He also noted that the equity market may receive a seasonal boost from year-end window dressing. Although this effect is usually temporary, it could help push the FBM KLCI higher, provided that the broader economic conditions remain supportive.
Bond and sukuk stabilising
While the government bonds are stabilising, both domestic corporate bonds and sukuk have become more attractive compared to US bonds following the Federal Reserve’s first rate cut in four years in September. — Bernama
