KUALA LUMPUR (May 10): Bursa Malaysia Bhd expects strong equities market performance in 2024, attributed to positive news on foreign direct investment (FDI), notably Microsoft’s US$2.2 billion investment in a cloud and AI hub.
“This was followed by the appointment of VSTECS Bhd as the first Amazon Web Services distributor in Malaysia, which would further strengthen Malaysia’s position in cloud and data centre segments,” it said in its Equities Market Highlights.
Bursa Malaysia said the strength in Malaysian equities can also be attributed to the revived expectation of US Federal Reserve (Fed) rate cuts as early as September, that drives foreign funds to rotate to other markets or asset classes, as well as optimism over better corporate earnings during this results season.
“Analysts generally expect some profit-taking in the shorter term, as they opine that the valuation is rather toppish, that is, valuations above the five-year median.
“Furthermore, with local institutional funds now sitting on gains year-to-date (YTD), there is potential for funds to lock in their gains, especially since Fed rate cuts have been pushed back,” it said.
However, the exchange pointed out that analysts remain hopeful that there is room for further growth towards the year-end, due to catalysts such as Fed rate cuts, continuous FDI momentum, earnings recovery, ringgit strength, and positive news flows from infrastructure project awards.
In addition, civil servant salary hikes and Employees Provident Fund (EPF) Account 3 withdrawals should boost consumer spending, thereby improving the overall economy, it said.
On initial public offerings (IPO), Bursa Malaysia is optimistic of hitting the headline key performance indicator (KPI) of 42 IPOs (spanning Main, Ace and LEAP markets), with an IPO market capitalisation of RM13 billion in 2024.
“There is a robust pipeline of IPOs from diverse industries with five upcoming listings (one Main Market and four Ace Market) in May 2024.
“With the clearer timeline for IPO approvals (pledge towards a three-month commitment for Main and Ace Markets), the exchange looks forward to attracting quality companies to list, particularly those in sectors that support national growth policies, blueprints and roadmaps,” it said.
Overall, Bursa Malaysia said that IPOs in Malaysia as of end of April 2024, year-to-date (YTD), have fared relatively better (in terms of average price gains) than IPOs in peer markets.
It said that performances of newly-listed companies on Bursa Malaysia in 2024 have been quite strong, with the majority (85% out of the 13 new companies YTD) closing above their IPO prices as at April 30, 2024.
“The majority (70% out of the 13 IPOs YTD) have seen price appreciation of over 20%.
“Five of the IPOs enjoyed price appreciation of more than 50%, and three of the IPOs have seen their share prices more than double,” the exchange said.
It added that total market capitalisation from new listings YTD aggregated to over RM5 billion, with total funds raised of RM1.7 billion.