Malaysia - Malaysian IPO market to be more robust in 2012, says HSBC

KUALA LUMPUR: HSBC expects the Malaysian initial public offering (IPO) market to be more robust this year with a number of large companies entering the local bourse.

It would outpace last year’s record on the back of bullish sentiment despite a potential slow growth in the global economy, said HSBC head of equity capital markets (South East Asia) Matthew Song yesterday.

Last year saw a total of 28 IPOs on Bursa Malaysia as at mid-December with Bumi Armada, UOA Development, Pavilion REIT and MSM Malaysia being the top four.

In 2012, the three most high in-demand IPOs are probably Felda Global Ventures Holdings, Integrated Healthcare Holdings and Gas Malaysia.

“Besides the known IPOs that will be rolled out, there are other IPOs in the pipeline that will come on board as well which would lift investors’ confidence indicating a resilient market against the uncertain global backdrop,” Song said at the HSBC media roundtable talk here.

Felda Global, a large producer of palm oil, sugar and other crop products, is scheduled to launch its IPO for a Main Board listing on May 10 and is expected to raise about US$1 billion from the exercise.

Integrated Healthcare, the healthcare arm of Khazanah Nasional Bhd, is expected to join the local bourse in the second half of the year and is looking to raise more than US$2 billion.

Thus, the strong IPOs in the pipeline would contribute to the stable and resilient Malaysian stock exchange this year, Song said, expecting the FBM KLCI to hit 1,700-1,800 levels by year end.

With the market barometer expected to see an upside of between 15 and 20 per cent by year end, he anticipated the local equity market to be a defensive market.

“Strong corporate results, organic growth, acquisition growth, and strong fund inflow from Europe and United States, as well as strong IPOs will fuel the anticipated upside in the local bourse.

“Here is a very domestic driven market and it’s resilient, defensive and it’s getting recognised,” he said.

For Asia, Song said there would be equity offerings of up to US$100 billion by year end and the themes that would shape Asian equity markets would be earnings resilience, franchise value, strong balance sheets and pricing anomalies.

“Retail and optimistic sentiment have been pushing equities higher this year but we have not seen a lot of conviction buying of Asian equities yet which suggests that investors are taking a wait-and-see approach.

“Going forward, equity markets will continue to be sensitive to the ongoing euro zone sovereign debt problems,” he said.

Bernama

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