This was followed with the establishment of other institutions, which included the Securities Commission and the domestic rating agencies. The Bank also put in place a comprehensive and modern depository, delivery and settlement system to facilitate the issuance, trading and settlement of debt securities in the market. Mechanisms to increase liquidity in the market to enhance the overall price discovery process were also introduced through the provision of updated market information. In addition, measures were also introduced to release the captive holdings and to facilitate the efficient borrowing and lending of securities. More flexible foreign exchange policies was also implemented to facilitate capital raising and investment by non-residents to further accelerate the development of our domestic bond market. Today, the Malaysian bond market is the largest in the ASEAN region, accounting for nearly 90 percent of our gross domestic product. Corporations now have access to more innovative and sophisticated financing solutions through the bond market to meet their diverse funding requirements. Financing through the bond market by the corporate sector now accounts for 58 percent of their total financing compared to 33 percent prior to the Asian financial crisis, when there was greater reliance on the banking system for financing. With the advent of new financing instruments and supporting infrastructure, trading activity in the secondary market have also increased by more than three fold, with the trading volume now amounting to RM516 billion. A key development of the Malaysian financial market is the enormous growth of the sukuk market.

The recent narrowing of spreads between benchmark issuances and triple A rated papers indicate that risk aversion has now eased. In the primary market, new corporate bond issuance has increased by about 40 percent to RM28.4 billion in the second quarter of this year. In the secondary market, the recent average daily trading volume has also increased by more than 50 percent. Demand for higher-yielding securities are also beginning to rise ahead of the recovery in the global economy. In addition, in view of the prospects for an earlier recovery in Asia, global investors in the current uncertain international environment will increasingly be looking at Asian financial markets for investment opportunities. This trend is already being observed through the substantial inflow of funds dedicated for emerging markets since the middle of April this year with an estimated average inflows of USD 144 million per week compared to the net outflow recorded in the early part of the year. This positive trend enhances the opportunity for Malaysia to further expand its bond market. Timely issuance of corporate handbook by AmBank The corporate handbook being launched by AmBank today therefore comes at an important juncture in the development of the bond market. Encapsulating the profiles of 100 conventional and sukuk issuers in the Malaysian bond market, it is indeed a commendable  2  BIS Review 27/2009  effort by AmBank to provide this comprehensive information to foreign and domestic investors to facilitate their investment decisions.