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 capitalization of securities listed on Bursa Malaysia reached RM2 trillion, surpassing RM2 trillion for the first time in May.
Total market capitalization and outstanding bonds/sukuk continued to grow, fueled by domestic reforms and economic growth forecasts of between 4.8% and 5.3% this year.
But export-driven sectors remained vulnerable to external shocks such as subdued global trade recovery, geopolitical tensions and structural changes in global supply chains, said Mohd Sedek Jantan, UOB Kay Hian Wealth Advisors’ (UOBKHWA) head of investment research.
He noted that these factors underscored capital markets’ sensitivity to external demand volatility, particularly as global trade adjusts to nearshore trends. Global market volatility is escalating as more central banks recalibrate monetary policy.
“As advanced economies near the end of their tightening cycles, policy deviations in emerging markets to stabilize currencies or counter inflation are adding to uncertainty in global financial markets.
“Adding to this complexity is the number of elections in key economies, such as the US, India and several EU countries, that are significantly changing foreign policy and trade alliances,” he said.
Stock market listings rise in 2024
In addition, Bursa Malaysia surpassed its 42 IPO target for 2024, having seen 52 companies listed on 16 December.
Eleven IPOs were on the main market, close to a ten-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 IPOs by the end of the year, continuing to outpace its Southeast Asian competitors in the number of IPOs.
Some RM5.33 billion 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 is doing better than 2023
The FBM KLCI climbed 10.6% year-to-date to 1,608.75 on Dec. 13, compared with the 1,453.10 recorded on the first trading day of 2024.
In August, the benchmark reached a peak of 1,678.80 points, a level last seen in December 2020.
Its overall performance is much stronger than last year, reflecting a positive trend in the stock market, despite the index’s underperformance relative to targets at 1,700 to 1,780 levels.
Amid rising global trade uncertainty following Donald Trump’s US election victory, UOBKHWA lowered its year-end target for the FBM KLCI to 1,650.
Mohd Sedek emphasized that high-growth sectors such as technology, healthcare and consumer protection should remain in focus, benefiting from robust domestic demand and supportive government initiatives, including measures under Budget 2024 and 2025.
“For those seeking stability amid market volatility, defensive sectors such as utilities and dividend-paying banking stocks offer attractive alternatives with stable returns,” he added.
He also noted that the stock market may get a seasonal boost from year-end window cleaning. While this effect is usually temporary, it could help propel the FBM KLCI higher, provided the broader economic conditions remain supportive.
Bond and sukuk stabilizing
While government bonds are stabilizing, 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
