Capital Market Resilient In 2025 Despite Volatile Global Landscape

KUALA LUMPUR, April 22 (Bernama) -- The Malaysian capital market remained resilient in 2025, continuing to fulfil its fundamental role in facilitating capital raising for the domestic economy despite a volatile global landscape, said the Securities Commission Malaysia (SC).

In its Annual Report 2025 released today, it said the size of the capital market increased to RM4.31 trillion in 2025 from RM4.17 trillion in 2024, as a slight decline in equities market capitalisation was offset by higher bonds and sukuk outstanding.

In the equities segment, total market capitalisation eased slightly to RM2.06 trillion from RM2.08 trillion in 2024, while the benchmark FTSE Bursa Malaysia’s (FBM KLCI) market capitalisation rose to RM1.19 trillion from RM1.15 trillion in the preceding year.

The market also recorded a strong initial public offering (IPO) performance, with 60 IPOs in 2025 compared with 55 in 2024, said the report.

Meanwhile, the bond market continued to expand, with total bonds and sukuk outstanding rising to RM2.25 trillion from RM2.10 trillion in 2024, supported mainly by lower redemptions of government bonds and higher corporate bond issuances.

The derivatives market also posted robust performance, recording a second consecutive year of record volume with 23.30 million contracts traded compared with 22.75 million previously.

PLCs Show Resilience Amid Challenges

A study by the SC found that despite an increasingly challenging business environment, most public-listed companies (PLCs) maintained healthy liquidity positions, with nearly 80 per cent recording a quick ratio above the prudent threshold of 1.0 times.

The study assessed Malaysian PLCs with significant revenue exposure to the United States as of October 2025.

Despite a weaker US dollar, which could pressure revenue conversion for export-oriented companies, profitability remained resilient, reflecting the firms’ ability to manage external challenges.

While some smaller companies faced increased leverage and liquidity pressures, many maintained stable operational performance, demonstrating discipline in managing leverage and strengthening their balance sheets.

Revision to Capital Markets, Services Fees

Over the past decade, the funding imbalance has become more apparent, with financial deficits recorded in most years, except in 2020 and 2021 when unusually high trading volumes during the COVID-19 period temporarily boosted revenue.

Since then, rising costs, particularly for professional services, have widened the gap between the SC’s resources and its responsibilities.

As such, a review of the fee framework is necessary to ensure the commission could continue delivering on its dual mandate of fostering a fair and orderly market while supporting inclusive and sustainable growth.

During this period, the SC has effectively subsidised the capital market, relying largely on equity trading levies to fund its operations.

However, as the Malaysian capital market has grown significantly in both breadth and depth, it has also become increasingly complex.

Recognising this evolution, the SC said the market is now ready to transition from a subsidy-based pricing model to a more proportionate structure that supports fairness and long-term sustainability.

Effective Jan 1, 2026, the SC implemented its revised fee regulations.

To ease the transition, capital market stakeholders have been granted a 50 per cent concessionary reduction in variable annual fees, as well as a 20 per cent reduction on product, fund-raising and other related fees.

These measures are intended to cushion the impact of the revision and facilitate an orderly transition to the new framework.

Malaysia's Outlook for 2026

The economy is expected to remain resilient in 2026, supported by stable domestic demand, particularly private consumption and investment anchored by national development priorities such as Budget 2026 and the 13th Malaysia Plan, the SC said.

However, risks to external demand persist due to global trade uncertainties and the absence of strong frontloading export activities seen previously, it added.

“In the domestic capital market, performance may be supported by global monetary easing, which could increase foreign portfolio flows into emerging markets such as Malaysia.

“In addition, technological advancements and rising investments in artificial intelligence (AI) are expected to spur regional market activity,” it said.

The regulator also said the release of the Capital Market Masterplan 2026–2030 (CMP) in 2026 would mark an important recalibration of the Malaysian capital market.

Premised on the pillars of vibrancy, inclusiveness, sustainability and regional opportunities, the CMP will leverage the Islamic capital market as a key differentiator, underpinned by strong regulatory and governance standards.

Priority would also be given to enhancing the long-term value proposition of Malaysian PLCs, including both top-performing and underperforming companies, it said.

-- BERNAMA