Malaysia's IPO boom is a one-off: analysts

Malaysia is tipped to be Asia's top IPO market for 2012 thanks to two of the world's biggest company listings this year, but analysts say the momentum is likely to fizzle out.

At a time of global economic distress, Malaysia's drive for initial public offerings is being propped up by pre-election encouragement from the government and by cash-rich state funds, the analysts said.

But they said the resource-rich, developing Southeast Asian country of 28 million people is not on course to supplant better known IPO capitals in the region such as Hong Kong and Singapore.

"Maybe this year is a record, but whether it can be sustained is a different thing," James Ratnam, a research analyst with TA Securities, told AFP.

Felda Global Ventures, an oil palm plantation giant, made its debut on the Kuala Lumpur stock exchange, known as Bursa Malaysia, last Thursday with an IPO that raised $3.25 billion.

Then on Tuesday, Asia's largest hospital operator IHH Healthcare announced a plan to raise $2.01 billion through a dual listing in Malaysia and Singapore, targeted for July 25.

The public offerings were behind only Facebook's troubled IPO of $16 billion this year, which suffered in part from the economic uncertainty gripping bigger stock markets around the world.

While English football club Manchester United is now going ahead with a US listing, the volatile climate has forced the delay of other major IPOs planned in Asia, including a $2.5 billion listing by Formula One in Singapore.

But Felda Global and IHH seem set to defy that trend, helped by representing robust and growing industries in commodities and healthcare respectively.

Shares in the palm oil company has already surged since its IPO and analysts expect IHH stock will do well too.

"We are putting Malaysia on the global map. We are actually now considered a safe haven," Ooi Chin Hock, a dealer with Malaysia's M & A Securities, told AFP.

IHH has already attracted 22 so-called cornerstone investors, including international fund managers, who have committed to buying more than 60 percent of the 2.23 billion shares on offer.

Ooi and others attribute their optimism in part to the support of cash-strong state funds keen to invest, as well as the government's backing of the IPOs ahead of elections that must be called by next April at the latest.

"It's time for the government to raise funds... The government is actually cashing in," Ooi said.

Felda Global is an arm of the Federal Land Development Authority, a government agency that previously provided land to the rural poor.

IHH is majority-owned by sovereign wealth fund Khazanah, which is chaired by Prime Minister Najib Razak.

Najib said the IPOs marked milestones in the government's plan to divest state-linked firms and attract foreign investors for the country to achieve developed nation status by 2020.

"I can safely say that this also offers further evidence of the vibrancy and growing depth of our capital markets -- once again underlining the fact that Malaysia can claim to be a bright spot on the otherwise dark canvas of global finance," Najib said at the IHH prospectus launch Tuesday.

Nazir Razak, chief executive of financial firm CIMB Group and Najib's brother, said Malaysia looked set to be Asia's top IPO market for this year. CIMB is the principal adviser and lead underwriter for the IHH listing.

Global accountancy firm Ernst and Young has said Bursa Malaysia was the third-biggest in terms of funds raised in IPOs in the second quarter of 2012, following NASDAQ and the New York Stock Exchange.

It said in a release last week that the momentum of IPOs in Southeast Asia was driven by "resilient financial performance, the support of cornerstone investors, pension and other funds, and ample liquidity".

But analysts said the Bursa Malaysia was unlikely to be able to sustain the momentum, noting that it had failed thus far to attract major listings from global players and remained far smaller than regional rivals.

Before this year, the last major listing in Malaysia was in 2010 when Petronas Chemicals Group Bhd., a unit of state oil firm Petronas, raised $4.14 billion.

Bernard Ching, head of Alliance Research, said big names wanting to list in Asia were still more likely to turn to Hong Kong or Singapore.

"In a volatile global market, Malaysia tends to do rather well," he told AFP. "(But) when the global uncertainties dissipate, IPOs in other markets will also pick up."

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • National Geographic 'Afghan girl' in Pakistan papers probe
    National Geographic 'Afghan girl' in Pakistan papers probe

    Pakistani officials are investigating after the famous green-eyed "Afghan girl" immortalised in a 1985 National Geographic magazine cover was found living in the country on fraudulent identity papers. The haunting image of the then 12-year-old Sharbat Gula, taken in a refugee camp by photographer Steve McCurry, became the most famous cover image in the magazine's history. Now Pakistani officials say that Gula applied for a Pakistani identity card in the northwestern city of Peshawar in April …

  • NYC, Orthodox Jews reach deal on circumcision suction ritual
    NYC, Orthodox Jews reach deal on circumcision suction ritual

    NEW YORK (AP) — The city said Tuesday it has reached a tentative agreement with members of the ultra-Orthodox Jewish community over a tradition known as oral suction circumcision. …

  • ‘Noy angered by previous SAF failures to get Marwan’
    ‘Noy angered by previous SAF failures to get Marwan’

    Supt. Raymund Train, who led the SAF team that killed Marwan in Mamasapano, Maguindanao on Jan. 25, recounted in a sworn statement the meeting he and senior SAF officers had with Aquino in Malacañang on Nov. 30. Train said among the senior officers who attended the meeting were then PNP chief Director General Alan Purisima, SAF chief Director Getulio Napeñas, SAF deputy commander Chief Supt. Noli Taliño and intelligence group chief Senior Supt. Fernando Mendez. …

  • Duterte: Disband all armed groups
    Duterte: Disband all armed groups

    All armed groups, including those of the communists and Muslim secessionist groups, should be disbanded for the country to achieve stability, Mayor Rodrigo Duterte said yesterday. Duterte said even the Moro Islamic Liberation Front, the Moro National Liberation Front and the New People’s Army should be asked to lay down their arms once these groups agree to join him in what he described as a unity government if he becomes President in 2016. Duterte said under the federal government that he is …

  • Vatican seeks to quell Mexican anger over pope's drug remark
    Vatican seeks to quell Mexican anger over pope's drug remark

    VATICAN CITY (AP) — The Vatican sought Wednesday to defuse a diplomatic tiff with Mexico after Pope Francis referred to the possible "Mexicanization" of his native Argentina from drug trafficking, the latest instance of Francis' casual speaking style getting him into trouble. …

  • School can’t sack unwed mom – SC
    School can’t sack unwed mom – SC

    The dismissal of an employee of a Catholic school on the grounds of premarital sexual relations and pregnancy out of wedlock was illegal, the Supreme Court (SC) has ruled. In a 23-page decision promulgated on Feb. 17, the third division of the high court struck down the decision of St. Scholastica’s College-Westgrove (SSCW) in Silang, Cavite to dismiss Cheryll Santos Leus for “disgraceful or immoral conduct” in violation of the school’s 1992 Manual of Regulations for Private Schools (MRPS). …

  • Who's your daddy? Hippo ancestry unveiled
    Who's your daddy? Hippo ancestry unveiled

    A great-great grandfather of the hippopotamus likely swam from Asia to Africa some 35 million years ago, long before the arrival of the lion, rhino, zebra and giraffe, researchers said Tuesday. "The origins of the hippopotamus have been a mystery until now," Fabrice Lihoreau, a palaeontologist at France's University of Montpellier and co-author of the study, told AFP. …

  • BOC destroys P50-M smuggled shoes
    BOC destroys P50-M smuggled shoes

    The Bureau of Customs (BOC) destroyed yesterday some P50 million worth of fake footwear products earlier seized in an anti-smuggling drive. The knockoffs of popular brands such as Nike, Adidas, Converse, Skechers, Northface, Leaveland, Merelle, Lacoste, Vans, Havaianas and Ipanema were confiscated from Warehouse 4 in Olivarez Compound, Parañaque City. …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options