WHETTING APPETITE: Despite global
uncertainties, the listing will be a resounding success
VIETNAMESE
shares, it seems, are currently the flavour of some fund managers investing
their funds in the Asean stock markets. Thailand and Malaysia are also on their
radar, according to one foreign fund manager, given their still attractive
valuation.
"Vietnam
now accounts for 40 per cent of my portfolio, followed by Thailand and
Malaysia. I have sold down my holdings in Jakarta," he told me.
The
foreign appetite for blue-chip and undervalued Malaysian shares could, however,
make a strong comeback following this month's listing of Felda Global Ventures
Holdings Bhd and the strong interest shown by foreign fund managers and
analysts at last week's Invest Malaysia conference.
One
chief executive officer of a Malaysian-listed company said he had numerous
one-on-one meetings with foreign fund managers during the two-day conference.
"Some of them even posed questions on Malaysian politics," he said.
Bursa
Malaysia, formerly the Kuala Lumpur Stock Exchange (KLSE) or its predecessor
the Stock Exchange of Malaysia and Singapore, has definitely seen better days.
During its heyday, the stock market was the biggest in Southeast Asia and the
third biggest in Asia after Tokyo and Hong Kong.
Singapore
has since overtaken Bursa Malaysia as the biggest stock market in the region.
Bursa is also facing stiff competition from fast-emerging Jakarta, Vietnam and
Bangkok stock markets in terms of capital inflows.
Invest
Malaysia, the eighth in the series and co-organised by Maybank and supported by
Malaysian Industrial Development Authority, was a showcase of top and emerging
Malaysian companies. This year, it drew a record 2,500 investors, businessmen
and company officials.
Prime
Minister Datuk Seri Najib Razak, who addressed the conference, used the
occasion to encourage investors and companies to capitalise on Malaysia as
Asean's "multinational marketplace of choice".
This is
because Malaysia lies at the very heart of Asean, a US$2 trillion (RM6.2
trillion) market of 600 million people, he said. Malaysia, too, is a
significant player in the Asean economic agenda.
Malaysia's
capital market, which includes the stock and bond markets, has introduced
various measures to attract more foreign investors to invest in Malaysia and
for foreign companies to raise funds in Malaysia.
There
have been some mixed results though. Foreign participation on Bursa Malaysia
has not been very encouraging due to issues of liquidity and "free
float".
For a
stock market, a huge market capitalisation alone cannot guarantee investor
interest.
For
foreign investors, it is also important that they are able to easily buy and
sell stocks. When a stock is illiquid or not easily tradeable, it becomes
expensive and time-consuming to buy a share.
Our
big-cap stocks are mostly government-linked companies, whose level of
"free float" is relatively small.
For
foreign investors who have high risk profile, these stocks are not that
attractive to them.
The
government is fully appraised of the issues. Najib said the government would
also continue to ensure that our capital market remained competitive and had
the depth and breadth to drive the national growth and economic agenda forward.
The
government's decision to set up a special Capital Market Task Force, to be
headed by the Finance Ministry secretary-general, is timely. The task force
should come up with quick, bold and impactful measures to take our capital
market to greater heights and stay ahead of our competitors.
The
task force should also address the problem of poor local retail investor
interest in the stock market.
Unlike
in the early 1990s, many small investors have shunned the market.
The
listing of Felda Global is definitely a major step forward for Bursa Malaysia
and Malaysia as a whole. If the listing goes ahead as planned, it would be the
biggest IPO in Asia and the second biggest in the world so far this year after
Facebook, the US social media giant.
Set to
be listed on June 28, Felda Global IPO is likely to proceed despite the current
global uncertainties that have curtailed the appetite for new listings as
investors are wary of the Eurozone crisis and China's economic slowdown.
Last
week, motor sport racing company Formula One decided to delay its Singapore
IPO, valued at up to US$3 billion. It became the fifth Asian IPO to be
postponed or pulled in a week.
Felda
Global's parent, Felda, is a microcosm of Malaysia and its success story. The
land development agency is now the world's biggest palm oil producer.
The
World Bank has testified that Felda is one of the most successful land
organisations in the world and should be used as a model for other countries in
Asia and West Africa.
Despite
the odds, the Felda Global IPO could be a resounding success and put Malaysia
firmly back on the global investors' radar.
A Jalil
Hamid | jalil@nstp.com.my
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