Here is a brief overview of Malaysian capital market.
A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year as the raising of short-term funds takes place on other markets (e.g., the money market).
A proper mobilization of financial resources is a critical condition of economic development and an efficient and competitive capital market is an important pre condition for the mobilization of financial resources. Financial resources can be sourced from domestic as well as International sources. Emerging markets in Asia have witnessed foreign capital flows, the growth of capital markets in Asia, including Malaysia has been to a large extent dependant on foreign capital inflows. Having said that national authorities in emerging markets have made efforts to strengthen and develop their domestic capital markets.
In relation to other emerging capital markets, the Malaysian capital markets are much more developed, but it still has a long way to go in terms of the next phase. Growth, structural changes and intense competition, have made it necessary to further increase the development of the capital market. The Government's Capital Market Master Plan for the period of 2000-2010 would go a long way in directing the development of Malaysia's capital market.
Capital market financing has developed along with Malaysia's economy. It is a reflection of increasing income, savings and private sector demand, the amount of funds generated in the capital market over the thirty years between 1962 and 1992 increased by Ringgit Malaysia (RM) 7.5 billion per annum.
The various types of capital market products and services as well as fund raising capacity increased during the 1990s.Till the late 1980s, government funding was dominant in terms of fund raising in the capital market. But towards the late 1980s onwards the, privatization resulted in the increased funding from the private sector. Along with the expansion in the capital markets, other activities like investment management funds, stockbrokerages and advisory services also saw growth. By September 2000, Malaysia had 62 licensed stock brokerages, 32 futures broking companies and 735 licensed futures brokers representatives.
The regulatory setup of the Capital market in Malaysia has witnessed major changes in the last decade, including streamlining, deregulation, proper re-regulation and increased regulatory and enforcement capacity, with the objective of having an efficient capital market and encouraging market innovation. Prior to 1993, the responsibility for monitoring the Malaysian securities industry was with the Registrar of Companies (ROC), Capital Issues Committee(CIC), Panel On Take-over’s and Mergers (TOP), Foreign Investment Committee (FIC), Bank Negara Malaysia (BNM), Ministry of Trade and Industry (MITI) and Kuala Lumpur Stock Exchange (KLSE). With the realization to have a single streamlined regulatory body to govern and monitor the capital markets, the Securities Commission Act 1993, established the Securities Commission in 1993.The Securities Commission’s responsibility was to act as a single regulatory body to encourage the development of the capital market.
Last Updated on: