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With an open economy, a thriving stock exchange, and one of the most active bond markets in Asia, Malaysia is also a major hub for Islamic finance. Now the country’s regulatory authorities are focusing on fintech and alternative funding.


The Emerging Asia Pacific Capital Markets: Malaysia

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Overview

Malaysia achieved independence in 1957 and since then has diversified its economy from a predominantly agricultural and commodity-oriented base to one that hosts a robust manufacturing and services sectors.

Malaysia has one of the most open economies in the world, facilitating trade and investment activities. In tandem with this open economy is a robust capital market that has seen continuous developments in the past 60 years.

The nation’s stock exchange, Bursa Malaysia Berhad, is at the core of the equity capital market. It is home to more than 900 listed companies and entities and features three different markets catering to a broad range of companies. Bursa Malaysia also features a broad range of products including listed equities, commodity futures, exchange-traded funds, and financial options, among other products. The total market capitalization for the exchange stands at USD369.06 billion as of 30 June 2020.

Conversely, Malaysia’s bond market is one of the most active in the Asian market. This can be seen from the active MGS (sovereign bond) market coupled with a corporate bond market size that represents over 50% of the country’s GDP. This active bond market has facilitated efficient financing of various economic activities in the country.

Malaysia has additionally played a leading role in the sukuk markets. Islamic finance features prominently in the Malaysian capital markets, catering to the needs on both the demand (investors) and supply (issuers) sides. Malaysia prides itself as a hub for Islamic finance and has achieved several global firsts, including the world’s first Islamic real estate investment trust.

The rise of fintech and alternative funding have also been embraced fully by the Malaysian regulatory authorities, as demonstrated by the various initiatives to develop this space. Peer-to-peer lending and crowdfunding are seeing increasing traction in line with the changing demographics of the investor base.

This article is from "The Emerging Asia Pacific Capital Markets: Challenges and Opportunities," published by CFA Institute Research Foundation.

About the Author

Jin Yoong Chong
Jin Yoong Chong CFA

Jin Yoong Chong, CFA, is director and principal trainer at Ogos Learning and co-founder of StudyLisa.com. Ogos Learning provides education services in the field of banking and finance, and StudyLisa.com is a mobile chat-based e-learning platform that caters to exam takers. Before forming Ogos Learning, he headed the structured products development team in AmBank’s Global Markets division and worked as a licensed fixed-income dealer at OSK Investment Bank. Mr. Chong is actively involved with the Asian Institute of Chartered Bankers (AICB) as an examiner, trainer, and curriculum developer for various examination programs. He also has authored and co-authored multiple textbooks in collaboration with AICB and Oxford Fajar, including textbooks for the PKMC licensing exam that is compulsory for all practicing interbank dealers in Malaysia. Mr. Chong obtained the PKMC certification with distinction. He currently serves as treasurer of CFA Society Malaysia.