Malaysia has RM3 bil IPO pipeline in 2H22 – Maybank IB

Market Sentiments | June 10, 2022

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According to Maybank Investment Bank (Maybank IB) chief executive officer Datuk Fad’l Mohamed, the Malaysian initial public offering (IPO) pipeline in 2H22 is valued at around RM3 billion. Across the wider equity capital market (ECM), the investment bank is also seeing some traction in the merger and acquisition (M&A) and private equity (PE) space. He was speaking at a press conference in conjunction with Maybank Invest Asean 2022 conference. There are still a lot of deal activities happening in the market. There is a strong ECM pipeline coming through, year to date with around nine IPOs. Going forward in 2H22, he is seeing a total deal value of about RM3 billion on ECM coming through in sectors like consumer, retail, general industrial, TMT (technology, media and telecommunications) and transport and logistics. On the M&A side, there is a lot of restructuring activities particularly among some of the GLCs and GLICs. There is also a lot of traction on the PE space, with buy-sell opportunities coming in, and also in-country consolidation. Meanwhile, the local debt capital market (DCM) has also remained stable with a full-year outlook of RM110 billion. This compares with RM114 billion recorded in 2021, according to Securities Commission Malaysia’s data. On DCM, he sees a potential of RM6.8 billion coming up in 2H22, and potential ESG-linked alone is over RM6 billion. The investment bank has completed 33 issuances totalling RM6.3 billion, of which sustainability issuance alone is RM2.1 billion. On sustainability-linked instruments, the investment bank is seeing opportunities for key projects that fall within the category, coupled with ample liquidity looking for such green assets. The other aspect is for some companies looking at transitioning, sustainability-tied instruments. Attractive proposition for a lot of clients to raise capital with clear targets in terms of the pathway of ESG. And on the demand side, a lot of investors are looking at this asset class, and continue to have a strong appetite to take up ESG-related papers, sustainability-tied instruments. With economic recovery, with refinancing of large maturities coming through this year and next, the environment is definitely conducive for capital raising. 

Malaysia 2H equities outlook hinges on global risk appetite – HSBC 

According to HSBC global private banking and wealth Southeast Asia chief investment officer James Cheo, the Malaysian equities market outlook in 2H22 is likely to depend heavily on global appetite for risk assets, with selective investment opportunities in beneficiaries of economic reopening and commodities sectors. The bank is currently neutral on Malaysia equities, which are really tied in to the general risk sentiment in the global economy, and at this stage the risk appetite in the world economy is still very fragile. Speaking at the HSBC 2H22 Investment Outlook briefing, he said the market may reassess the Malaysian market again when there is a more concrete kind of improvement in the global dynamics, particularly on how the recovery is in the picture of inflation. He acknowledged that Malaysia is on a “fairly solid” growth path given the Southeast Asian nation’s well-diversified export base from crude oil, palm oil as well as playing a prominent role in the global semiconductor supply chain. Malaysia’s economy grew 5% in the first quarter of this year thanks to improvements in labour market, domestic and external demand amid easing pandemic restrictions. This came after a 3.1% gross domestic product (GDP) growth last year. Malaysia’s GDP is expected to grow 5.5% this year thanks to tailwinds from improving manufacturing activities and favourable commodities prices. This has taken into account an expectation for another 50 basis points overnight policy rate hike this year, with Bank Negara Malaysia potentially ending 2022 with a benchmark interest rate of 2.5%. In terms of foreign exchange outlook, while the ringgit has endured high volatility in 1H22, the domestic currency will likely stabilise in 2H22 and trade around 4.2800 against the US dollar by end of this year. With the impact of pandemic restrictions receding and reopening of the economy, private consumption is going to bounce back, investments are likely to also be quite robust. Therefore, there are several selective investment opportunities, particularly in sectors associated with reopening, consumption, banking, commodities and semiconductor. Although the bank’s outlook is neutral on Malaysian equities, there are selective opportunities, because various parts of the economy are actually doing very well. 

Foreign funds purchase RM477.5mil net of local equities – MIDF 

According to MIDF research data, the foreign inflow turned positive on Bursa Malaysia for the week ended June 3, 2022 with net purchases of RM477.5mil. This was in line with the swing to a positive inflow in Asian markets after eight weeks of net outflow. This was owing to the US dollar index (DXY) losing appeal as forecasts of the US non-farm payrolls were trimmed vigorously. Based on the provisional aggregate data for the seven Asian exchanges that MIDF tracks, investors classified as “foreign” bought US$2.3bil last week. On the local bourse, net buying from foreign investors was recorded from Monday to Wednesday. The heaviest net inflow came on Tuesday with RM320.8mil net of local equities bought by foreigners. Meanwhile, local retailers remained net sellers with a net outflow of RM121.4mil. Local institutions were net sellers for a fourth consecutive week to the tune of RM356.1mil. In terms of participation, all investor classes except for local retailers showed an improvement for the week. Foreign investors and local institutions saw an increase in the average daily trade value (ADTV) by 110.3% and +24% respectively. Meanwhile, local retailers posted a decline of 2.5% in ADTV. 

Eye On The Markets 

This week, on Friday (10June), the Ringgit opened at 4.3990 against the USD from 4.3975 on Tuesday (7June). Meanwhile, the Ringgit was 3.1849 to the Sing Dollar on Friday (10June). On Tuesday (7June), the FBM KLCI opened at 1538.74. As at Friday (10June) 10:00am, the FBM KLCI is down 43.71 points for the week at 1495.03. Over in US, the overnight Dow Jones Industrial Average closed down 638.11 points (-1.94%) to 32,272.79 whilst the NASDAQ shed 322.05 points (-2.75%) to 11,754.23. 

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