Tuesday October 30, 2012
M'sian bond market still robust; RM100bil issued this year compared to RM70bil in 2011
BY LEONG HUNG YEE and THOMAS HUONG
KUALA LUMPUR: The local bond market remains robust, hitting RM100bil as of Sept 30, surpassing the total issuances of RM70bil in 2011, according to Securities Commission (SC) chairman Datuk Ranjit Ajit Singh.
He said the issuance of PLUS Bhd's RM30bil sukuk early this year was a significant milestone as it represented the single largest sukuk issuance globally.
“As of end-Sept, the total amount of bonds outstanding stood at close to RM980bil, compared with RM841bil at end-2011, reflecting the continued growth of the bond market,” Ranjit said at the 17th Malaysian Capital Market Summit here.
He said Malaysia was the third largest local currency bond market in Asia and in the forefront of sukuk issuance accounting for some 70% of global sukuk outstanding.
Ranjit also said the country's capital market grew by 14% or RM300bil to RM2.4 trillion as of Sept 30 from RM2.1 trillion last year.
Astro, the latest to debut on the Main Market of Bursa Malaysia, raised US$1.5bil or RM4.55bil for its initial public offering (IPO).
It was the country's third largest IPO and sixth largest globally.
FGVH is Asia's biggest IPO and the world's second biggest behind social media network Facebook. FGVH raised some RM10.4bil, while IHH raised slightly over US$2bil from their respective IPOs.
Ranjit pointed out that the unit trust industry had continued to grow steadily, with net asset value increasing to RM291bil as of Sept 30 from RM249bil as of Dec 31, 2011, reflecting the industry's continued importance as a driver in mobilising public savings into the capital market.
“The strong performance of the Malaysian capital market stands out against the backdrop of uncertain and relatively weak global market conditions.
“The success and resilience of our market is the culmination of structured and directed efforts to build the ecosystem and connect all its key components including a solid and effective regulatory framework and market liquidity,” Ranjit said.
He also said SC had launched a framework last month to allow retail investors to participate in the ringgit bond and sukuk market, allowing them to initially invest in bonds and sukuk issued or guaranteed by the Government.
“The RM300mil retail tranche of Danainfra's upcoming bond provides an opportunity for retail investors to invest in an infrastructure development that will affect their daily lives as well as gain experience in investing in this asset class directly.
“In the next phase, their access to bonds and sukuk will be expanded to include issuances by public listed companies and banks, for which guidelines and regulations will be announced in the first quarter of 2013,” he said.
Ranjit also said that the framework for business trusts would be ready by year-end.
“There is an increased investor appetite for steady stream of returns and issuers are looking for ways to monetise assets but also retain control,” he said.
Additionally, he said the SC was also working with the industry towards introducing an integrated framework for unlisted agricultural managed investment schemes and tax incentivised agricultural sukuk to help facilitate the flow of capital to the agricultural sector.
“The integrated framework will also provide opportunities for syariah-based investing while helping Malaysia's agricultural sector expand domestically and internationally,” he said.