INVESTORS' CONFIDENCE IN BURSA BOLSTERED LAST YEAR DUE TO DOMESTIC FACTORS - SC 

KUALA LUMPUR, March 25 (Bernama) -- The resilience of the Malaysian economy, ongoing strategic initiatives and promising foreign direct investment inflows have played a role in shoring up investors’ confidence in Bursa Malaysia in 2023, said the Securities Commission Malaysia (SC).

In its Capital Market Stability Review 2023 released today, the commission said despite the FBM KLCI recording a yearly decline of -2.73 per cent to close at 1,454.66 points on Dec 29, 2023, FBM Small Cap soared 9.57 per cent as investors shifted their buying interest to small capitalisation stocks.

It highlighted that in the first half of the year, the domestic equity market experienced foreign outflows due to the United States Federal Reserve’s monetary policy tightening and banking crisis in March 2023, including the failure of Silicon Valley Bank (SVB) and Signature Bank. 

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Nevertheless, stock indices gradually improved, concluding 2023 in recovery mode, primarily driven by a more stable market sentiment partly fuelled by the potential peak in interest rate cycles set by global central banks.

SC said Bloomberg’s Composite Valuation Score had ranked Malaysia higher in comparison to most tracked emerging markets driven by the expectation of robust economic expansion, a firmer ringgit, and higher foreign direct investments. 

Overall, the average daily trading volume and value were higher in 2023 at 3.55 billion units and RM2.29 billion, respectively.

On flows, it said performance in 2023 was influenced by foreign investors who were net sellers for seven months in 2023, with a net outflow of -RM2.34 billion compared to 2022’s net buy of RM4.40 billion.

Meanwhile, local institutional investors were net buyers, with a net buy of RM3.30 billion, rebounding from a net sell of RM6.53 billion in 2022, while local retail investors sold a net of RM0.96 billion in 2023.

In 2023, foreign equity holdings declined to 19.54 per cent as of December 2023 compared to 20.59 per cent in December 2022. 

As for earnings of publicly listed companies (PLCs), the commission said they showed improvement in their reported earnings of RM73.15 billion as of the third quarter (3Q 2023) from 3Q 2022’s RM70.48 billion.

Among the sectors with significantly improved earnings were transport (456.67 per cent), financial services (12.11 per cent) and consumer services and retail (121.48 per cent), while in contrast, earnings of manufacturing and plantation sectors contracted by 36.09 per cent and 54.03 per cent, respectively.

“Malaysia’s growth trajectory in 2024 may continue to face challenges amid subdued global demand caused by external headwinds. 

"The protracted wars in Ukraine and the Middle East, which have disrupted global supply chains, coupled with a weakened ringgit, may exacerbate price pressures and foreign currency exposures,” SC concluded.

-- BERNAMA