KUALA LUMPUR: The continuous development of the local equity market will provide wider opportunities for alternative savings and investment instruments to the retail segment, encouraging greater public participation in the equity market going forward.

The Finance Ministry (MoF) said overall, the domestic capital market remained robust, with the equity market recording net foreign inflows amounting to RM8.2 billion and purchase of shares by local retail investors worth RM1.8 billion from January-August 2022.

"As at end-August 2022, the market capitalisation declined by 6.9 per cent to RM1,706.3 billion.

"However, the overall market remains steady, with market transacted value recording RM363.2 billion, while the total volume of shares traded was 489.4 billion units.

"The market velocity recorded 30.7 per cent, while market volatility stood at 9.6 per cent," it said in its Economic Outlook 2023 report released today.

It said foreign holdings based on market capitalisation in the local bourse stood at 20.1 per cent during the same period.

Meanwhile, during the first seven months of 2022, the gross funds raised in the capital market grew by 1.4 per cent to RM165.2 billion.

The moderate increase was contributed mainly by the public sector's gross fundraising activities, which recorded an expansion of 5.7 per cent to RM102.9 billion.

During the same period, MoF said the Malaysian Government Securities (MGS) and corporate bond yields generally trended upwards across all tenures.

The higher yield environment was due to upward adjustment of the Overnight Policy Rate by a cumulative of 50 basis points (bps), supported by encouraging domestic Gross Domestic Product growth and a favourable labour market condition.

The government securities yield rose steadily with the one-year, three-year, five-year, and 10-year MGS yields increasing within the range of 32 bps to 114 bps.

"The yield trend in the corporate debt market reflects higher capital cost and a greater required rate of return amid rising interest rates," it said.

On the other hand, the report said investors are expected to remain cautious following the US Federal Reserve's indication of further interest rate hikes to curb high inflation.

"Nonetheless, this could be partly offset by continued inflows of foreign funds into Malaysia's equity market coupled with initiatives under Budget 2023," it added.

-- BERNAMA