Malaysia’s deep financial markets continue to ensure sufficient liquidity and facilitate smooth financial intermediation to support economic growth. The equities market is one of the most developed in Southeast Asia with Bursa Malaysia being one of the largest exchanges in the region hosting over 900 companies. Large-cap stocks particularly those in the FBM KLCI are highly liquid with strong trading volumes.
The bond market is among the largest and most liquid in the region where the total local currency bond market is 129% of the GDP as of March 2024. Due to Malaysia’s investment grade credit rating, Malaysian bonds are included in various global bond indices such as the Bloomberg Global Aggregate Index, JPM Government Bond Index (GBI-EM), and WGBI.
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Malaysia's local financial markets are efficient in terms of pricing and transparency. The markets are responsive to changes in market information with prices adjusting based on new developments. However, to prevent market manipulation and excessive volatility, Bursa Malaysia has implemented various safeguards, ensuring stability and fair trading practices. Read more about these safeguards here.
The Securities Commission (SC) and Bursa Malaysia impose strict governance requirements on listed companies, ensuring timely disclosure of financial reports, corporate announcements and other important information. The Malaysian Code on Corporate Governance (MCCG) emphasizes transparency and accountability in corporate governance practices. Find out more details on the MCCG here.
For further details on corporate governance practices, visit the SC’s resource page here.
The Malaysian Ringgit (MYR) operates under a flexible, floating exchange rate regime, meaning its value is determined by market forces such as supply and demand. The Central Bank of Malaysia (BNM) does not target a specific exchange rate level, nor does it provide a forecast for the ringgit. As a floating currency, fluctuations are expected due to global economic conditions and market movements.
For more details on Malaysia’s exchange rate policy, please refer to the official BNM page on MYR exchange policy here.
Despite periodic fluctuations, Malaysia's robust economic foundations and favorable investment environment are anticipated to bolster the ringgit's stability over the long term.
Foreign investors generally face no major restrictions on the movement of funds into and out of Malaysia. Bank Negara Malaysia (BNM) facilitates the free flow of funds, ensuring that foreign direct investments (FDI) and portfolio investments are allowed with ease. Repatriation of profits, dividends, and capital is permitted, provided the necessary documentation and reporting requirements are fulfilled.
However, BNM maintains certain balance of payment safeguards under its Foreign Exchange Policy (FEP) to ensure financial stability. For example, certain transactions, such as large-scale transfers or transfers exceeding a minimum reporting amount depending on your residency status, are subject to reporting requirements or approvals. These measures help monitor and manage large capital flows while maintaining market stability.
For more detailed information and specific guidelines on restricted transactions, visit the BNM Foreign Exchange Policy page here.
To begin investing in financial products in Malaysia, investors typically need to open the necessary trading accounts, engage a broker and comply with the investment regulations and guidelines. Refer to our investor guide for more detailed information here.
Malaysia's stock market exchange by Bursa Malaysia is open to foreign participation for stock ownership and foreign company listings.
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Malaysia is acknowledged for its stable and effective investment regulatory environment, which makes it a compelling choice for foreign investors.
The following are regulatory bodies that are key in ensuring our markets functions well:
- Bank Negara Malaysia
Central bank of Malaysia that oversees monetary policy, exchange rates and financial institutions.
- Securities Commission Malaysia
Regulates and develops Malaysia's capital markets, overseeing securities, derivatives and fundraising activities.
- Bursa Malaysia
National stock exchange of Malaysia that provides a platform for trading equities, bonds, derivatives and other financial instruments.
The prevailing interest rates for Ringgit (MYR) deposits and loans in Malaysia are determined by a reference rate framework. This framework consists of two key components: Bank Negara Malaysia’s Overnight Policy Rate (OPR) and the spread set by individual financial institutions. The spread reflects factors such as the bank's operational costs, risk premium and other financial considerations.
The Overnight Policy Rate (OPR) is the interest rate set by the Monetary Policy Committee (MPC) of Bank Negara Malaysia and serves as a benchmark for the cost of borrowing in the financial market. In simple terms, the OPR influences how much it costs for banks to borrow funds and in turn, this affects the interest rates they offer to consumers on deposits and loans.
Changes in the OPR are made by the MPC to maintain monetary stability, manage inflation, and support economic growth. Find more detailed information on the reference rate framework here.
Find information and insights into how the OPR works and its role in monetary stability here.