KUALA LUMPUR (Aug 8): Companies that made their debut on the ACE Market over the past 20 months since January seem to have defied jittery market sentiment towards small-cap stocks.

Notably, the ACE Market-listed companies are the worst hit judging by the performance of the index. 

The ACE Market Index slid from the year’s peak of 6,022.73 to a low of 4,681.44 in March. It closed at 5,199.39 on Thursday. Year to date (YTD), it has fallen 2.3% compared with the FBM KLCI which has gained 9.33% and the FBM Small Cap Index 9.77%.

Nonetheless, a majority of the 43 new listings, which made their debut since January last year, are still trading above their initial public offering (IPO) prices. 

Among the top-performing IPOs of 2023, Software developer Autocount Dotcom Bhd (KL:ADB) stands out with a 206% surge from its IPO price of 33 sen, followed by snack food distributor Wellspire Holdings Bhd (KL:WELLS), which has soared 194% from its IPO price of 23 sen. [see table]

For those that made debut this year, the star performer is Go Hub Capital Bhd (KL:GOHUB), an enterprise IT services provider to bus and rail segment, led the way with a 240% jump against its IPO price of 35 sen, while engineering firm UUE Holdings Bhd (KL:UUE) leaped 196% against its IPO price of 24 sen.

Meanwhile, only eight stocks have fallen below their listing prices, according to data compiled by The Edge.

Among the eight are corrugated paper packaging maker DS Sigma Holdings Bhd (KL:DSS), which has met the profit requirement for a transfer to Main Market, slid 37.3% against the IPO price; DC Healthcare Holdings Bhd (KL:DCHCARE) fell 28%; Birds’ nest processing firm MYMBN Bhd (KL:MBN) which slipped 26.2%, Plytech Holdings Bhd (KL:PLYTECH) down 8.57%, and Minox International Group Bhd (KL:MINOX), distributes of stainless steel sanitary valves, tubes and fittings, dropped 4%.

Others are Smart Asia Chemical Bhd (KL:SMART), which fell 13.75%; KTI Landmark Bhd (KL:KTI), which decreased by 10%; and Alpha IVF Group Bhd (KL:ALPHA), which declined by 3.13%.

The number of ACE Market IPOs has remained robust, particularly with Bursa Malaysia’s introduction of a framework that allows for the transfer of listings from the LEAP Market to the ACE Market. Three more upcoming ACE Market IPOs — Sik Cheong Bhd, Elridge Energy Holdings Bhd, and EPB Group Bhd — are scheduled to be listed this month.

“Most investors are looking to the ACE Market for growth stories. If there is a reversal in market sentiment, investors may become a bit skeptical [of them], but certain stocks on the ACE Market still present very good opportunities for high growth,” Areca Capital Sdn Bhd CEO Danny Wong told The Edge. 

Wong added that technology and construction-related companies are poised to benefit from trends such as the expansion of data centres.

Amid concerns about a potential US economic recession and the unwinding of Japan's carry trade, which could have a cascading effect on global asset valuations, investors may seek higher risk premiums on securities with low liquidity, for entry or exit when market situation becomes volatile, said Fortress Capital Group CEO Thomas Yong. 

“[The] ACE market offers opportunities to participate in high growth companies, but the investment horizon could be longer. The volatility of the current market could affect short term pricing. 

“But, there should still be room for earnings growth, hence the ACE Market shall continue to grow.  Factors affecting growth are government policies as well as global economic growth expectations,” said Yong. 

Kenny Yee, head of research at Rakuten Trade Sdn Bhd, observed that during periods of economic uncertainty or market corrections, investors tend to become more risk-averse, prompting a shift towards Main Market companies. 

Additionally, the overvaluation of some ACE Market stocks during bull markets can lead to sharp corrections when market sentiment turned, he said. “For the ACE Market, it’s crucial to assess valuations, such as reasonable PE ratios and better earnings.”

Looking at the performance of the ACE Market’s top 30 biggest losers YTD, Widad Group Bhd (KL:WIDAD) led the list, with its share price plunging 90.72%. The company was in the limelight when the Human Resource Development Fund invested in its put and call option arrangement.

This is followed by Artroniq Bhd (KL:ARTRONIQ), Asdion Bhd (KL:ASDION) and Silver Ridge Holdings Bhd (KL:SRIDGE) whose share prices declined by 83.24%, 71.43% and 69.13%, respectively. 

Notably, Widad, Artroniq and Silver Ridge were significantly impacted by heavy selling pressure earlier this year due to margin calls. Bursa Malaysia issued unusual market activity queries then. They also have been loss making in the past few years. 

Other top losers include Leform Bhd (KL:LEFORM) which fell nearly 65% and MQ Technology Bhd, a stock linked to Deputy Prime Minister Datuk Seri Ahmad Zahid Hamidi, fell by 60%.