The FBM KLCI posted a yearly decline of 4.6%, ending 2022 at 1,495.49 points, largely influenced by rising recessionary risk, higher global market rates, strict Covid-19 lockdowns in China and Russia’s invasion of Ukraine.
The regulator’s inaugural CMSR stated that the average trading volume and value trended downwards to three billion units and RM2.18 billion respectively last year despite the country entering the Covid-19 endemic phase which has reopened business activities.
Poor global equity market outlook and monetary policy tightening, both due to higher global inflationary pressure, had also affected market sentiment despite healthy local retail and foreign investor participation.
However, the FBM KLCI valuation improved slightly compared to regional emerging markets amid an anticipated stronger economic momentum, and lack of circuit breakers in 2022, given that dynamic and static price limits for equities were in place as part of the risk management mechanism to address excessive market volatility.
Reporting on global bonds, the SC said its market volatility remained elevated since the beginning of 2022 due to aggressive monetary policy tightening by major central banks to fight inflationary pressures, sparking recession fears.
Corporate bonds and sukuk continued to be resilient with a low default rate of 0.18%, compared to 0.17% last year.
On matters related to cryptocurrencies, the market was hit by a winter which saw a significant decline in major cryptocurrency prices, according to the CMSR.
Most tracked digital assets traded on the local digital asset exchange recorded a negative performance as recessionary fears and geopolitical tensions sapped demand for high-risk assets, creating a negative trading activity trend towards end-2022.
But overall, digital assets value traded remained small at 0.35% compared to the domestic equity market as of December 2022.
At today’s conference, SC chairman Awang Adek Hussin said the Malaysian capital market’s continued resiliency highlighted the value of exercising prudence and shared accountability while capitalising on growth prospects that allows the market to better manage risks, preserve financial resilience and stability, and support economic growth.
Moving forward, Awang said SC’s focus in 2023 includes regulatory reforms, fundraising ecosystem enhancement, advancement of the environmental, social and governance (ESG) agenda, technology adoption facilitation and corporate governance improvement.
The SC will also be prioritising sustainability and talent development to ensure the capital market continues to contribute to broader social and environmental goals.
“Looking towards the future, the SC remains committed in pursuing initiatives that will further strengthen Malaysia’s capital market, and enhance its role as a catalyst for economic growth and development,” he said.