Against this backdrop, the statutory body said that the Malaysian capital market continued to play a vital role in financing the domestic economy with notable improvement in fundraising activities across all market segments.
“In terms of performance, the domestic bond market registered positive returns while the equity market experienced a positive shift in sentiments towards small and mid-cap companies, especially in the energy, construction and technology sectors,” it said.
It also said that the performance of Malaysian capital market last year was in line with the global capital market, which ended the year on a positive note, aided by relatively accommodative global financial conditions, despite continued volatility throughout the year.
In the equity market for instance, the MSCI World Index ended the year 25.2 per cent higher (2018: -10.4 per cent) while the MSCI Emerging Markets Index rose 15.4 per cent (2018: -16.6 per cent).
Likewise, the global bond market registered positive returns throughout the year as lower global interest rates and stronger risk aversion drove bond yields to touch multi-year lows.
The JPMorgan Government Bond Index (JPM GBI) Global rose 3.9 per cent in 2019 (2018: -1.2 per cent) while the JPM GBI Emerging Market gained 12.9 per cent (2018: 4.9 per cent).
“Growth of the global economy continued to soften in 2019, characterised by a synchronised slowdown across most economies in the developed and emerging world.
“This was driven primarily by significant weakness in global manufacturing and trade activities amidst the ongoing trade tensions and geopolitical uncertainties throughout the year,” it said.
Additionally, the slowdown in the global economy has led the International Monetary Fund (IMF) to continue to downgrade its global growth projections.
In October, it lowered its global growth forecast for the fifth consecutive time since April 2018 to 3.0 per cent in 2019 – the weakest since the Global Financial Crisis (GFC).
However, in contrast to the manufacturing sector, the services sector remained relatively resilient across the globe, particularly in Advanced Economies (AEs) on the back of positive labour market conditions and continued growth in consumer spending.
Global policy uncertainty continued to significantly affect the performance of the global economy and shape the performance of the global financial market during the year.
This was reflected by measures of policy uncertainty which reached new highs in 2019, which saw the World Trade Uncertainty Index – a measure of global trade policy uncertainty – rising nearly ten-fold in the fourth quarter of 2019 (Q4 2019) compared to Q4 2018.
To recap, the year 2019 commenced with a temporary trade truce between the United States (US) and China since December 2018, but experienced sharp escalations in tariff war between May and August 2019.
Apart from tariffs, the US had also imposed business restriction on China’s technology companies via its entity list in May and declared China as a currency manipulator in August.
The trade negotiation between the two nations took a positive turn in September 2019 with the US and China officially agreeing to a phase-one trade deal in mid-December.
However, trade tensions were not isolated only to the US and China but also between the US and its other major trading partners in Europe and Latin America, as well as among other countries such as between Japan and South Korea.
Amidst slower global growth and higher policy uncertainty, global monetary policy turned towards greater easing, with more than half of the economies globally adopting a more accommodative monetary stance in 2019.
Meanwhile, moving forward, the SC expect Malaysian economy to remain on a steady growth path.
“Although the domestic capital market continues to be influenced by key external developments, it is expected to remain resilient and orderly, underpinned by Malaysia’s strong macroeconomic fundamentals, ample domestic liquidity and supportive capital market infrastructure,” it concluded.