M’sia IPO market still strong, says Deloitte

KUALA LUMPUR: The Malaysian initial public offering (IPO) market has emerged from the Covid-19 pandemic with a 102% increase in the proceeds raised at Us$681mil (Rm3.12bil) compared to 2021, driven by investor demand for good business fundamental companies, says professional services firm Deloitte.

The global provider of audit and assurance, consulting, financial advisory, risk advisory, tax and legal company also said that the number of ACE Market listings had doubled from 11 in 2021 to 22 this year.

It said the interest rate hike would potentially encourage more companies with good business fundamentals to seek a listing, as they can leverage the equity market for a diversified and cheaper funding base.

Deloitte Malaysia disruptive events advisory leader Wong Kar Choon said there remained a steady pipeline of companies looking to tap the capital markets.

“The strong performance in 2022, against a backdrop of global inflation, rising interest rates and the threat of a recession, is proof of the resilience of the Malaysian capital market,” he said at the Deloitte virtual press conference – 2022 SEA IPO market performance and outlook yesterday, as reported by Bernama.

Meanwhile, on the South-east Asia IPO market, Deloitte said funds raised were subdued across the capital markets for the first 10.5 months of this year, even though the IPO count and IPO market capitalisation are expected to hold steady from the previous year.

Data by Deloitte as of Nov 11, 2022 showed that companies in South-east Asia had raised Us$6.3bil (Rm28.9bil) from 136 IPOS to date this year, 52% down from a record Us$13.3bil (Rm60.9bil) from 152 IPOS in the full year of 2021.

Thailand and Indonesia were tops in Southeast Asia for 2022, with each having raised above Us$2bil (Rm9.2bil), collectively accounting for 76% of total funds raised in South-east Asia. There are higher numbers of small listings this year from small companies that needed to raise funds.

“There are only two blockbuster IPOS, PT Goto Gojek Tokopedia Tbk and Thai Life Insurance, which means that the bigger companies are holding out and postponing their listing in anticipation of better market conditions,” Deloitte said.

Deloitte South-east Asia and Singapore disruptive events advisory leader Tay Hwee Ling said that prior to the Covid-19 pandemic, the IPO activity moved in tandem with the economy and gross domestic product growth, but the inverse had happened in the last two years

“The reopening of the world economies and borders have fuelled a rise in global inflation from 4.7% in 2021 to 8.8% in 2022, and consequently an increase in the Federal Reserve interest rate of almost 4% over the course of the year in a bid to tame the surging inflation.

“In the face of these macroeconomic factors, the South-east Asia IPO market has held up considerably well, while we continue to see the growth potential in our economies,” she said at the conference.