Question

Provide your comments on the current growth of primary market of Malaysian stock market with evidence(s).

Answer 1

The primary market and secondary market are always connected and when there will be a higher valuation for the companies in the secondary market, the primary market players will be attracted to list themselves in the secondary market.

Malaysian markets are one of the most efficient markets in the emerging market categories because they are providing with high amount of transparency and they are also providing with high level of foreign inflows support so they will be providing incentive for the foreign direct investments in their Markets and they are attracting a lot of foreign direct investments and hence their market share are continuously growing into larger market.

The growth of primary market can be attributed to the growth of secondary markets also because when there is higher evaluation for the companies in the secondary markets then the unlisted players who did not have issued their shares in the markets are feeling motivated to issue their shares in the market in order to attract high valuation so all these unlisted companies are trying to issue there shares in the Malaysian stock exchange and they are wanting to capitalise their earnings and they are wanting to attract evaluation because there is a higher amount of foreign inflows as well so these emerging markets are in demand who have a higher amount of transparency and a better rules and regulation and political stability as well.

if we have to provide the evidence, in 2019 there was total 30 companies who encashed upon their earnings and they listed themselves in the stock exchanges in order to attract higher valuation.