Strong Malaysian capital market seen, SC says Malaysia has good fund-raising track record
KUALA LUMPUR: The local capital market is expected to be “reasonably strong” based on the pipeline of capital raising, Securities Commission (SC) chairman Datuk Ranjit Ajit Singh said.
“We are not targeting any specific number but we have said (based on projections) that the capital raising figures for the local (market) are reasonable. However, it would depend on how the market condition would pan out for the rest of the year,” he told reporters after delivering a public lecture on Islamic Wealth Management co-organised by BNP Paribas Malaysia Bhd and the International Centre for Education in Islamic Finance.
He said Malaysia had a fairly successful fund-raising track record for the last few years. Notably, RM146bil was raised from the Malaysian market last year, of which RM124bil was through the bonds market and RM22bil through the equities market.
Ranjit also said the regulator was targetting to position the country as an Islamic wealth management centre, following Malaysia’s success in other areas of Islamic financial services such as Islamic banking, sukuk and takaful.
“Malaysia has a large pool of savings worth some RM1 trillion. The challenge we have is to ensure that some of these pools of savings are intermediated through the capital markets, so that you create scales in terms of those intermediaries to address Malaysians’ needs, and then to position yourself outside,” he said.
One of the strategies was for foreign asset management units to enter the country, he said, adding that the regulator had issued 19 licences to Islamic fund management firms to-date.
He pointed out that such companies got to enjoy tax incentives.
According to Ranjit, of the US$25 trillion (RM82 trillion) worth of mutual funds in the world, the demand for Islamic funds was only US$60bil to US$70bil (RM197bil to RM230bil), which showed that there was still lack of demand for the product, prompting him to urge fund managers to participate in Islamic fund management to create more awareness.
Notably, Malaysia was home to the world’s largest unit trust industry, with 169 Syariah-compliant funds, he said.
Assets under management (AUM) for Islamic funds stood at approximately RM80bil last year, up RM32bil or 66.7% from RM48bil in 2010, he added.
He also said the RM80bil represented about 16% of the total funds industry.
“By 2020, the SC has projected the Islamic fund management industry’s AUM to expand to RM322bil,” he said.