INVE$T | Market Sentiments
Deloitte Malaysia IPO leader Wong Kar Choon foresees a continuous momentum of listings next year as economic recovery gets underway in view of the higher number of initial public offerings (IPOs) on Bursa Malaysia this year. There are some potential IPOs next year as the firm received enquiries on IPOs from its clients. He said that based on what they know in the market and how busy they are with clients, he feels very bullish about IPO listings in the coming year. The number of positive Covid-19 cases are declining and coupled with the additional booster vaccination shots, these provide confidence to the capital market. Malaysia saw a higher number of IPO listings this year, totalling 25 year-to-date from 19 listings last year, bolstered by the drive-in vaccination rates and the reopening of the economy. Despite it being the second year of the pandemic, fund raising has not stopped. Companies have continued to attract investments through mergers and acquisitions as well as IPOs. There is still continuous support of retail investors in the market. Of the 25 listings up until now, Malaysia has had four Main Market IPOs, followed by 11 in the ACE Market and the remainder in the LEAP Market. Proceeds raised from the IPOs were lower at RM789mil from RM1.9bil last year mainly due to MR DIY Group (M) Bhd’s listing that raised RM1.5bil the year before. The proceeds raised made MR DIY Group’s IPO the largest in three years and the only listing to surpass the billion-ringgit threshold last year. In 2021, there was no such big IPO. However, CTOS Digital Bhd (which was listed this year) also did an outright offer of sale of RM990mil plus the RM200mil from the public funds raised, making it an impressive RM1.2bil deal, especially in the pandemic year. There is an increase in the number of real estate sector listings in the country this year compared to a year ago as a result of the economic recovery from the Covid-19 pandemic. Property technology firms would gather an attractive IPO listing in Malaysia, noting that property tech listings in other countries have been appealing to retail and cornerstone investors. The capital market in Malaysia continues to be vibrant, supported by both retail and cornerstone investors. They are interested in particularly certain type of businesses that have technology and digital outreach. They will look out for outfits that disrupt conventional businesses. It is also worth noting that price-to-earnings ratio of tech companies tends to be higher than conventional businesses.
According to Deloitte Malaysia business tax executive director Choy Mei Won, the government’s proposal to remove the RM200 stamp duty on contract notes for the trading of listed shares and increasing the rate to 0.15% would make it more expensive to buy and sell shares. It would impact intraday traders, given their high frequency of buying and selling transactions. Following the move, potentially a marginal percentage of intraday traders may be attracted to trade in other financial hubs such as Singapore and Hong Kong.
Lack of impetus could leave market directionless – Inter-Pacific Securities
Inter-Pacific Securities Sdn Bhd said there is still a lack of market impetus, and this could leave the market directionless over the near term. The research house said that once again, the key index made little headway as fresh buying interest remains thin, despite the prospects of an early General Election following the Melaka state election. As it is, there were still few leads to draw market players and as a result, traded volumes continue to fall and slipping to just 2.45b shares – its lowest in 2021. The broader market was also directionless and became broadly lower to result in losers still overwhelming gainers for the day. Fresh buying interest remains anaemic with the ongoing results reporting not providing the much-needed catalysts to attract more market players back to the market. Therefore, the wait-and-see stance is likely to prolong and keep the FBM KLCI trapped within a tight range for the time being, hovering between the 1,520 and 1,530 levels over the near term. The other support and resistance levels are at 1,515 and 1,540 points respectively. The lower liners and broader market shares are also experiencing low participation, and this is likely to prolong their insipid outlook. With few positive leads, the selling and profit taking activities could also stay and leave most of these stocks lower for the time being.
Eye On The Markets
This week, on Friday (26Nov), the Ringgit opened at 4.2345 against the USD from 4.1890 on Monday (22Nov). Meanwhile, the Ringgit was 3.0939 to the Sing Dollar on Friday (26Nov). On Monday (22Nov), the FBM KLCI opened at 1526.76. As at Friday (26Nov) 10:00am, the FBM KLCI is down 13.12 points for the week at 1513.64. Over in US, the overnight Dow Jones Industrial Average closed down 9.42 points (-0.03%) to 35,804.38 whilst the NASDAQ added 70.10 points (+0.44%) to 15,845.20.