PETALING JAYA: Fundraising through Malaysia's capital market is expected to reach RM120bil this year, down from RM146.6bil in 2017, which was an exceptional year for the country's capital market.

According to the Securities Commission (SC), domestic fundraising in 2018 is expected to be mainly driven by capital raising in the corporate bond and sukuk market for infrastructure financing as well as refinancing of bonds and sukuk. 

"The Malaysian capital market is expected to benefit from the country’s strong economic fundamentals. Furthermore, the sustained interest in emerging markets is expected to be advantageous to the Malaysian capital market as a whole," the SC said in its annual report released on Thursday.

"The domestic capital market will continue to play a major role in supporting economic growth through financing of business expansion and infrastructure development," it added. 

Based on current estimates, the SC said total capital raising through primary and secondary markets is expected to remain resilient at approximately RM120bil in 2018. 

Fundraising through the corporate bond and sukuk market is expected to amount to about RM100bil this year, compared with a record high of RM124.88bil in 2017. 

Equity fundraising, on the other hand, is expected to be approximately RM20bil in 2018, with RM8bil to be raised via initial public offerings (IPOs) and the remaining RM12bil via the secondary market. 

In 2017, equity fundraising totalled RM21.7bil, of which  RM7.2bil was raised via new equity listings with 12 IPOs.

SC chairman Tan Sri Ranjit Ajit Singh said in his statement that the overall outlook for the Malaysian capital market this year is positive, with higher levels of growth expected across key market segments. 

"Against a setting of sound economic fundamentals and higher earnings forecasts, the overall outlook for the Malaysian capital market is positive. 

"Through the expected expansion in investment and infrastructure spending, market-based fundraising is estimated to remain strong at approximately RM120bil," he said.

The SC said that the impending 14th general election (GE14) is expected to drive investor sentiment in early 2018. However, post GE14, attention is expected to return to fundamentals of the capital market, which have been strong and are expected to continue improving. 

Ranjit noted that 2017 was an exceptional year for Malaysia's capital market, with the overall growing 12.6% to RM3.2 trillion. 

"At 2.4 times the size of the domestic economy, the Malaysian capital market is ranked fifth largest in Asia on a GDP adjusted basis," he said.

Growth in 2017 was driven by the equity market which expanded by 14.4% to RM1.9 trillion as well as the bond and sukuk market where the total outstanding value grew 10.1% to close at RM1.3 trillion.

"Capital markets globally saw a broad-based rally in asset prices in 2017, driven by improving global growth and accommodative monetary policies.Supported by better growth prospects, robust trade and commodity price stability, emerging markets in particular benefited from strong net capital inflows," Ranjit said.

"Against this backdrop, the Malaysian capital market saw one of the strongest performance in recent years, with double-digit growth recorded across all market segments," he added.