Malaysia’s first half IPO report card

At the start of 2022, we see most countries and major economies opening their borders and gradually returning to normalcy. ‘Normalcy’ was a word we hardly used in the past, but post-pandemic, this word brings a sense of joy. With that said, one would have thought that the return to normalcy would contribute to a more vibrant global capital market.

But the market turmoil stemming from the Russia/Ukraine conflict in early 2022 and the tightening of monetary policy by key governments have halted a bit of the lively and spirited push the global capital market enjoyed in 2021. Reports have shown that the number of IPOs in the US have dropped significantly by 80% in the first half of 2022. Some organisations have chosen to wait and see, in a hope of an economic recovery later for better IPOs and fund-raising activities.

However, it seems what’s happening in our home ground Malaysia and the Bursa Exchange is the complete opposite. Although there are news of an economic slowdown, the capital market and IPOs in Malaysia remain vibrant. There is something about “Good Malaysian businesses” that command the attractive capital market pricing. We left 2021 with a good and promising feeling for 2022 and that is what we are still feeling now – mid-2022.

For the first 6 months of 2022, Malaysia recorded 16 listings raising approximately RM1.8 billion (equivalent to USD431 million) with a market capitalisation of RM6.6 billion. In comparison to the first half of last year, Bursa had around 13 listing which raised approximately RM357 million. This is a fantastic number in comparison to global key markets such the US, that saw a reduction in their IPO listing. The first half also saw 2 key main market listing that gave a market capitalisation of above RM1 billion, namely Senheng New Retail Berhad and Farm Fresh Berhad. All these data points have shown continued confidence in the Malaysia capital market, with a proven track record of business.

What’s happening in the region?
Continuing from the year before, Indonesia is still leading the pack and have raised approximately USD1.42 billion from a total of 21 IPOs. This is followed by Malaysia at USD431 million, Singapore at USD421 million, Thailand at USD349 million, and Philippines at USD309 million.

Being Southeast Asia’s largest economy and having one of the world’s largest populations, Indonesia continues to see BIG IPOs. In the first half of 2022, Indonesia had one of the largest IPO in the region with the IPO of GoTo. The merged entity between Gojek and Tokopedia represent a market capitalisation of USD28 billion. So, the question is, will Indonesia continue to see such sizable IPOs in the second half of 2022? The ingredients are there.

Outlook
There may be some negative sentiments in the market and possibility of companies pulling their brakes in such times, but the IPOs in Southeast Asia especially in Indonesia and Malaysia have shown that the right companies can continue to raise funds and attract investors. It is observed that good technology enabled companies will continue to get the funds they need for expansion, either through an IPO or via Private Equity funding
 

The views and opinions expressed in this article are those of Wong Kar Choon, IPO Leader of Deloitte Malaysia.