M’sia IPO market remains robust

M’sia IPO market remains robust

KUALA LUMPUR: Despite a spate of delayed initial public offerings (IPOs) regionally, there has been no indication of a slow down in Malaysia. “So far there has not been any indication of a slowdown in IPOs because of softening market conditions at least. It is different here than in Hong Kong or China, where the weak market has resulted in some IPOs being put on the backburner,” said OSK head of equity capital markets Gan Khim Koon. This was echoed by UBS Securities Malaysia’s head of Malaysia equities Haizan K Johari. “We have not seen any indication of IPOs being delayed at this point,” he said. July in particular is a busy time for new listings. Eversendai Corp Bhd listed in July and currently on the docket are another seven companies waiting to go public. The biggest is Bumi Armada Bhd, which sparked a great deal of interest among investors. However, Gan said there is expected to be a lull post-July before picking up during the latter part of the year. “This is because the regulations state that the earnings posted in a prospectus must not be older than six months. So if a company’s financial year ends on Dec 31, then June 30 is the last day for them to get their prospectuses approved,” he explained. However, there have been reports of Axis Global Islamic REIT, which was due to be listed soon, having been delayed. But according to industry players, this may have had to do with other factors along with the weaker market sentiment. The volatile market was one of the main reasons cited for delayed listings in Hong Kong, one of the most recent being China Outfitters Ltd. Luxury brand Prada SpA’s listing last month was lacklustre as a result of market sentiment, while Samsonite International SA’s IPO was priced at the lower end of its bookbuilding spectrum. Gan is quick to note, however, that in the case of the Hong Kong IPOs, the amounts being raised are much larger than those here in Malaysia. “Of course, it’s a more difficult endeavour when you are aiming to raise billions from your IPO,” he said. But Gan did add that while there wouldn’t be a delay in listings, it still remains to be seen whether investors will continue to show interest as market sentiment turns rocky. “Because of how quickly the market moves, a company looking to list cannot afford to not be ready to do so in case the situation improves,” he said. Looking ahead to the next six months, most are in agreement that global markets will continue to be skittish even as the crisis in Greece has found some level of resolution. OSK Research in its Malaysia strategy report for the second half of 2011, is expecting a number of positive developments in July, namely the government’s Economic Transformation Programme, to add some bounce. “Definitely due in part to the ETP, we note that foreign investors appear to be returning to our shores. While we do not yet have the latest foreign shareholding numbers from Bursa Malaysia, the exchange operator’s latest trading statistics on the local bourse indicate that foreign trading has risen to 30.4% in terms of value of trades after having been depressed since 2009. We believe the foreign shareholding level should have risen accordingly in June,” stated OSK. OSK is expecting the local stock barometer, the FBM KLCI, to climb to 1,680 points by year-end. This article appeared in The Edge Financial Daily, July 8, 2011.