Bursa expects strong equities market performance in 2024 on positive FDI news
KUALA LUMPUR: Bursa Malaysia Bhd expects strong equities market performance in 2024, a ributed to positive news on foreign direct investment (FDI), notably Microso ’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 a ributed 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 be er corporate earnings during this result 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 si ing 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 toward the yearend 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 hi ing the headline 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 in May 2024 (1 Main Market, 4 Ace Market).
“With the clearer timeline for IPO approvals (pledge towards a three-month commitment for Main and Ace Markets), the exchange looks forward to a racting 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 the end of April YTD, have fared relatively be er (in terms of average price gains) than IPOs in peer markets.
It said the performance of newly listed companies on Bursa Malaysia in 2024 has been quite strong, with the majority (85 per cent out of the 13 new companies YTD) closing above their IPO prices as at April 30, 2024.
“The majority (70 per cent out of the 13 IPOs YTD) have seen price appreciation of over 20 per cent).
“Five of the IPOs enjoyed price appreciation of more than 50 per cent, and three of the IPOs have seen their share prices more than double,” the exchange said.
It added that the total market capitalisation from new listings YTD aggregated to over RM5 billion, with total funds raised of RM1.7 billion.