Malaysia is making a fresh bid to expand its capital market, launching a five-year plan to raise the value of its listed companies and encourage more investors to trade actively.

The country’s Capital Market Masterplan, unveiled last month, aims to expand its capital market, as measured by the market capitalization of listed equities, plus bonds outstanding, to MYR 5.8–6.3 trillion (USD 1.4–1.6 trillion) by 2030, an increase of 35–47% from MYR 4.3 trillion (USD 1.1 trillion) in 2025.

The Malaysian capital market’s expansion in recent years has been driven largely by bonds and sukuk (Islamic bonds), which dominated fundraising. The value of local companies listed in Malaysia was USD 449 billion in 2024, less than that of Southeast Asian peers Singapore (USD 637 billion) and Thailand (USD 531 billion), according to World Bank data.

The blueprint seeks to address problems such as weak equity valuations and thin trading volumes. Retail participation in Malaysia’s capital market is relatively low, with only about a quarter of the population investing directly. Younger investors, in particular, are increasingly sending money overseas, especially to exchange-traded funds (ETFs).

“We only have 13 ETFs [on the local market]. When you talk to the younger [people], they are all investing in ETFs abroad,” said Mohammad Faiz Azmi, chairman of Securities Commission Malaysia. The new master plan seeks to address this by offering new products and lowering barriers to entry, allowing fractional investments and offering more accessible financial instruments, such as low-cost, smaller-ticket ETFs.

The latest master plan is the fourth edition. The first (2001–2010), published after the Asian financial crisis, built institutional foundations; the second (2011–2020), which came in the wake of the global financial crisis, reinforced governance; the third (2021–2025), released during the Covid-19 pandemic, sought to preserve stability, according to the securities commission.

One key initiative in the 2026–2030 master plan is the “MY Value Up” program, which aims to encourage listed companies to commit to measurable value creation, including setting clearer targets on returns, governance and long-term performance.

The commission “will adopt a tailored approach, emphasizing value creation and measurable performance based on the different [publicly listed company] archetypes with the objective of raising the visibility of quality companies, catalyzing re-ratings where warranted and establishing structured recovery pathways for laggards,” the plan said.

“As an incentive, consideration will be given to launching an index for top-performing companies, providing subsidized support and listing-fee rebates to reinforce positive outcomes,” the document says.

Ivy Ng, head of equities research at CIMB Securities, said the program could help improve the reputation of the Malaysian market in the eyes of investors.

“We view the program as a potential catalyst for a market re-rating by improving corporate performance, governance, and transparency, which could strengthen investor confidence and attract more capital to Malaysia,” she said, but noted that market sentiment may “remain weak” in the near term due to Middle East tensions and higher oil prices.

To expand market size, the master plan also aims to increase the number of listed companies, targeting large, privately held companies.

Malaysia had 1,111 publicly listed companies as of February, more than Singapore (606), Indonesia (958) and Thailand (868). The local stock exchange, Bursa Malaysia, had 60 IPOs in 2025, the highest number in two decades, but main market listings accounted for only 11 of these, with the rest taking place on the Ace or Leap markets, which cater to smaller companies.

Deloitte’s Southeast Asia IPO Capital Market 2025 report showed the region had 120 IPOs in 2025, raising USD 6.5 billion, up 76% from the previous year. But the biggest IPOs came from Singapore, Vietnam, and the Philippines.

In the latest five-year plan, regulators are seeking out larger companies that have yet to list. The commission said it has identified around 150 large private companies, roughly 20 of which are candidates for future listings.

“The biggest one of [these] is probably Sarawak Energy,” Faiz told reporters on March 9, when the master plan was announced, referring to a utility company operating in the eastern state of Sarawak. He added that engagement is underway to understand why such companies have stayed private.

Policymakers are also considering whether companies that receive substantial government support should be required to list after a certain period, a shift that would mark a more interventionist approach to market development.

The Malaysian push comes as the country seeks to reposition itself within the regional capital market. Bursa Malaysia recently signed a memorandum of understanding with Hong Kong Exchanges and Clearing (HKEX) covering cross-border listings, joint indexes, ETFs, Islamic finance products, and carbon markets.

The partnership reflects a growing view that regional connectivity is essential to attract capital from around the world.

“Global capital is increasingly seeking diversification in the growth stories of Asia,” said HKEX CEO Bonnie Chan at a signing ceremony for the tie-up in Kuala Lumpur on March 27. She added that there is a need for “stronger pan-Asia collaboration” to support smoother capital flows.

Rika Naito, a senior portfolio manager at Nomura Asset Management, said global investors are starting to pay greater attention to local champions in countries like Malaysia after recent global market gains that have been driven largely by semiconductor and infrastructure stocks linked to artificial intelligence.

“You see emerging local players gaining traction in consumer sectors, and even in manufacturing,” she said.

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.

Note: MYR figures are converted to USD at rates of MYR 3.97 = USD 1 based on estimates as of April 13, 2026, unless otherwise stated. USD conversions are presented for ease of reference and may not fully match prevailing exchange rates.