KUALA LUMPUR, April 16 — The Malaysian capital market remains orderly with ample liquidity and robust infrastructure despite facing the Covid-19 health crisis which is impacting the global economy.
Securities Commission Malaysia (SC) chairman Datuk Syed Zaid Albar said although mirroring the global market which fell significantly, the Malaysian equity market had somehow performed relatively better.
“Foreign sell-off had been cushioned by active participation of local institutions and retail investors,” he told a media conference on the SC 2019 Annual Report here today.
Syed Zaid noted that there had been some volatility in the domestic bond market, but it continued to do relatively better than emerging peers, supported by deep domestic liquidity fund in management industry.
“There had been a rise in redemption in March. Our licensed fund managers were poised to manage it in an orderly manner, resulting in no major risks which had been observed thus far. In fact, we had seen new investments flowing, particularly into unit trusts.
“Our Investment banks and brokers also remained strong to mitigate the volatility, particularly during the Movement Control Order (MCO) period, They are even stronger today than 10 years ago, resulting from our prudential requirement and supervision on intermediaries,” he said.
Syed Zaid said measures taken by the government and regulators would cushion the impact of Covid-19 but it is hard to ascertain the extent of mitigation until the full impact of the pandemic panning out.
He said greater diversification and fund managers’ liquidity management processes had mitigated downside risks.
The SC is now focusing on companies and intermediaries to enable them to sustain through this challenging period, and be able to seize the recovering opportunities when the time arrives, he said.
On the unit trust industry, SC deputy chief executive officer Datuk Zainal Izlan Zainal Abidin said the industry remained relatively stable despite the challenging environment.
Based on preliminary data, he said the overall net asset value of unit trust fell 4.0-5.0 per cent since the end of February, mainly due to market movement, primarily the lower market prices hitting the equity funds.
“While there were relatively higher redemption in first half of March, as well as in the first week of the MCO. We have seen redemption activities moderated subsequently in the first week of April with the industry recording net sales position.
“We had also observed redemption in equity fund switching to other funds. This means that some of the proceeds have remained invested in the industry rather than taken out for cash,” he explained.
Zainal Izlan said in that regard, the liquidity position of unit trust funds is currently supported by the fund managers liquidity risk management and measures.
He said the SC regularly engaged with fund manager and closely monitored local and regional development, including contagion effects.
Commenting on alternative funding for small and middle-capitalisation companies, SC chief regulatory officer Foo Lee Mei said equity crowdfunding (ECF) and peer-to-peer (P2P) funding had been key sources of funds for small and medium enterprises (SMEs).
She said since its establishment three years ago, the ECF and P2P platforms had raised over RM700 million for 1,143 micro SMEs.
“The SC is currently conducting feasibility studies to see how these small and mid-cap companies, including SMEs, could issue debt instruments, in addition to what have been allowed via the ECF and P2P,” she added. — Bernama
