KUALA LUMPUR (Nov 16): The initial public offering (IPO) market in Malaysia is expected to remain robust in 2024, supported by a strong pipeline of offerings and healthy institutional and retail investors' appetites for companies with good growth propositions, particularly those in the consumer and tech or tech-related industries, according to Deloitte Malaysia.
Deloitte Malaysia disruptive events advisory leader Wong Kar Choon said the capital market initiatives that have been announced by regulators have also boosted market vibrancy and enhanced investors’ access into the market.
Wong highlighted some of the latest policies poised to improve fundraising, sustain IPO market vibrancy and trading liquidity, namely government incentives for green technologies, tax deductions for eligible tech-based companies on the ACE and LEAP Markets, and exemptions for IPO approved by Bursa Malaysia from the recently-announced capital gain tax.
"What we have seen in the Malaysian IPO market is there has been a steady amount of good IPOs in the pipeline that have already submitted their draft prospectus to the regulators for approval. So that's a very good start.
"Then, we have a very stable government. Also based on the data that we see, there's a lot of investor support from the retail as well as institutional investors. So all this combination actually provides a very positive outlook for Malaysia's IPO market in 2024 which I think is quite encouraging," he said at Deloitte's Southeast Asia Annual IPO Press Conference on Thursday.
During the presentation session, Wong said that Malaysia's IPO market remained active so far this year, led by quality issuers that sustained or exceeded their market capitalisation upon listing, supported by an active investor participation
He reported that there were 28 IPOs as of Nov 15 — against Bursa Malaysia's target of 31 listings for the whole of 2023 — raising about US$715 million in total.
Despite fewer IPOs and total funds raised compared with 2022, which saw 35 listings raising US$801 million, year to date total IPO market capitalisation has already surpassed that of 2022, at US$2.77 billion compared with last year's US$2.55 billion.
It was also noted that the ACE Market dominated this year's IPO with 21 listings, compared with seven in the Main Market.
"The listing requirements for the ACE Market are more accommodating towards companies with good growth propositions, and the lower ticket size of IPO offer shares continues to attract a steady flow of investor participation.
"We observed that, generally, IPOs with reasonable valuations generated strong interest from the market and a good majority continue to demonstrate decent post-IPO share price performance," Wong said.
Indonesia leads Southeast Asia's IPO market
As of Nov 15, data by Deloitte showed that the Southeast Asian capital markets, including Indonesia, Thailand, Malaysia, Singapore, Vietnam and the Philippines, saw 153 IPOs raising approximately US$5.5 billion, down from US$7.6 billion from 163 IPOs in the full year of 2022. It was also noted that the IPO amount raised was the lowest in eight years.
Indonesia saw the highest amount of IPO funds raised among the six Southeast Asian exchanges with a total of US$3.6 billion raised by 77 IPOs.
Indonesia made up half of the region’s number of IPOs and 66% of the total IPO amount raised across the six exchanges, making it the fourth strongest stock exchange globally year-to-date in 2023, behind only China, the United States and the United Arab Emirates.
Deloitte Southeast Asia and Singapore disruptive events advisory leader Tay Hwee Ling pointed out that there is an observable trend of an increasing number of companies listing on the secondary boards of Southeast Asian bourses.
She said listing on the junior boards of the stock exchanges, which cater to high-growth small and medium enterprises (SMEs), may be seen as a springboard to the Main Board for some IPO aspirants, as the listed-company status may propel the companies toward business growth expansion and further fundraising.
"There are many SMEs in Southeast Asia with good growth potential, and a good financial ecosystem can provide these companies with the right environment to thrive and maximise this potential. This year, the Energy, Resources & Industrials and Consumer industries are two of the strongest in the market," Tay added.