The momentum that Malaysia’s capital market experienced in the first half of the year is likely to continue for the rest of 2017.

According to estimates from CIMB Investment Bank, an estimated $2 billion was raised in terms of initial public offerings (IPOs) in the first half of this year. They also expect a couple of mega IPOs to hit the market in the second half or in early 2018.

Even amidst global uncertainties, the Securities Commission of Malaysia announced that the Malaysian capital market had reached a value of 2.84 trillion ringgit ($663 million) last year. The growth is likely to continue given that equity capital market activities have also increased by 40 percent this year.

“Malaysia’s capital markets have been recognised as one of the most developed capital markets among the emerging economies in Asia. With the support of the gradually stabilising economy of Malaysia and the efforts of Malaysia’s Security Commission to enhance the market, Malaysia successfully achieved a growth in the capital markets in 2016,” says Lee Kien Han, managing partner of Han & Partners.

“The growth was mainly driven by the increase of the equity market as well as the bond and sukuk market, which are in line with the initiatives taken by the Malaysia’s Security Commission to promote good corporate governance and the focus on Islamic fund and wealth management.”

Besides being a strong market in the region, Malaysia’s capital markets also have a unique feature given the diversity of the country’s demographics.

“One of the unique features of Malaysia’s capital markets is that the Islamic capital markets runs concurrently with the conventional capital markets. The Islamic capital markets supplement the conventional capital market and generate capital market diversification while maintaining stability even with global uncertainties. This is also a key driver to the growth of Malaysia’s overall capital market given its ability to create innovation in the capital market,” says Alvin Lee Sze Chang, an associate with the Chinese practice group of Han & Partners.

The size of the Islamic capital markets totaled 1.69 trillion ringgit last year, accounting for a sizeable 60 percent of the domestic capital markets.

PRIME OPPORTUNITIES

This gives Chinese investors a market with prime opportunities. Fortunately, investing in Malaysia is relatively secure and affordable.

“In terms of security, the regulatory bodies have dedicated significant efforts to supervise and enforce high standards or market conduct to secure the interest of investors. For instance, the Security Commission took a total of 58 enforcement actions and restituted 423 investors with the sum of approximately 1.8 million ringgit in 2016,” says Chiam Jef Fri, an associate with the Chinese practice group of Han & Partners.

“In terms of affordability, the brokerage firms have offered competitive prices for the share trading on Bursa for as low as 7 ringgit for each trade, which encourages retail investors to invest in Malaysia’s capital markets,” he adds.

According to Chiam, Malaysia is the first in the region to introduce the Equity Crowd funding Framework (ECT), and in less than a year since its implementation, 14 issuers had raised a total of 10.4 million ringgit through six registered ECT platforms.

In addition, Malaysia has recently launched a new platform, the Leading Entrepreneur Accelerator Platform (LEAP) Market to provide a simple and easy listing platform for small and medium enterprises to raise funds from the equity market on Bursa.

But as with any investment, prudence and due diligence is advised.

“It is prudent for investors to seek proper legal advice from legal counsels or other relevant experts in Malaysia before carrying out any investment in Malaysia to ensure that their rights are protected and that all procedures and relevant rules and regulations are complied with,” says Lee Kian Han. “In light of the rising investment scams and illegal get-rich-quick schemes in Malaysia, investors are urged to conduct extra due diligence for any sophisticated investment schemes offered by any party.”