KUALA LUMPUR (Nov 6): Gross funds raised in the Malaysian capital market declined 14.4% to RM143.7 billion during the first seven months of 2020 from a year earlier due to lower fundraising activity in the private sector although public sector fundraising increased, the Ministry of Finance (MoF) said in its Economic Outlook 2021 report. 

The MoF said on the back of global economic uncertainties and rising geopolitical risks, fundraising in the domestic capital market however remains promising, buoyed by ongoing and resumption of strategic projects.

“Fundraising activities to recover,” the MoF said.

The MoF said fundraising activity in the private sector fell 48.6% to RM45.8 billion.

"Gross funds raised by the private sector through the domestic equity market declined from RM5 billion to RM0.3 billion. The sharp decline was due to cautious investors’ sentiment during the lockdown period. 

"During the same period, funds raised through new corporate bond issuances also fell by 45.9% to RM45.6 billion. The bulk of issuances were medium-term notes, accounting for 92.1% of total corporate bonds.

"The majority of funds were raised by finance, insurance, real estate, and business services sectors, accounting for 72% of new corporate bond issuances. The funds were mainly allocated for infrastructure projects, working capital and business activities,” the MoF said.

Gross funds raised by the Malaysian public sector increased 24.5% to RM97.9 billion during the first seven months of 2020.

The MoF said the expansion was contributed by strong demand for government papers or bonds to support the various stimulus packages.

According to the MoF, the issuance of Malaysian Government Securities (MGS) rose to RM50 billion while the issuance of Islamic-based Malaysian Government Investment Issues (MGII) expanded to RM47.9 billion.

“During the same period, foreign holdings of MGS and MGII stood at 38.2% and 5.8% respectively. The holding portfolios indicate that Malaysia’s debt market remains attractive to institutional and foreign investors, attributed to its deep, liquid and investor-friendly nature,” the MoF said.

For more stories on the Economic Report 2020/2021, click here.