‘Better prospects for Bursa boosts environment for IPOs’
Better prospects for the local bourse this year will foster a more conducive environment for initial public offerings (IPOs), especially from small and medium enterprises.
UOB Kay Hian Wealth Advisors wealth research and advisory head and designated portfolio manager Mohd Sedek Jantan said the barometer index was anticipated to perform positively this year, projecting the index to reach 1,605 points.
He said the Malaysian stock market displayed a positive trajectory in the first quarter of the year with the FTSE Bursa Malaysia KLCI (FBM KLCI) ending at 1,536.07, up 5.6 per cent year-on-year.
An upward trend was sustained throughout the quarter, with the index peaking at 1,558, underpinned by a resilient domestic
economy and effective policy.
Other key factors driving this growth included appealing valuations, high dividend yields and a depreciation of the ringgit, which attracted more investments.
“The correlation between IPOs and market indices can be intricate. Generally, positive market indices, indicative of investor confidence and economic health, can foster a conducive environment for IPOs,” Sedek said.
He said given the market’s anticipation of rate cuts, the upward trajectory would likely persist.
“Small and mid-cap stocks may serve as indicators of growth or value. However, it’s important to note that the IPO performance is influenced not only by broader
market conditions, but also by individual company prospects and macroeconomic factors at the time of the IPO.”
He said despite a subdued market in the first quarter, Malaysia and Indonesia remained prominent destinations for IPO issuers in the region, with nine IPOs on Bursa Malaysia.
Overall, the Asean region saw 38 IPOs, raising US$1 billion. This marked a decline of 27 per cent in the number of IPOs and a 31 per cent drop in proceeds.
Last year, IPO issuances improved to RM3.6 billion from 2022’s RM3.5 billion with the listing of 32 companies.
The benchmark FBM KLCI declined by 2.7 per cent last year, ending at 1,454,66.