Rakuten Trade has said that Malaysia will likely exceed 15 initial public offerings (IPOs) this year, with a focus on three sectors, namely technology, healthcare, and construction. This comes following a recent report by Ernst & Young (EY), which revealed that Malaysia has become one of several new IPO hotspot markets.

For context, the EY Global IPO Trends 2023 report – which was published at the end of 2023 – said that Malaysia saw increased IPO transaction volume and proceeds last year, which propelled it to surpass traditional IPO giants like Hong Kong and China. Specifically, Malaysia recorded 32 IPOs last year, and the increased transaction volume outpaced the five-year average by a significant 21%. Meanwhile, the proceeds surged by 25% over the five-year average.

Aside from Malaysia, other new IPO hotspot markets that were also identified in the EY study included Indonesia and Thailand. Together, the three countries dominated ASEAN’s IPO market, accounting for 148 of the total 157 IPOs in the region.

In response to this, vice president of equity research at Rakuten Trade, Thong Pak Leng said that more companies are expected to aim for IPOs in Malaysia as the economy and businesses continue to recover from the impact of the Covid-19 pandemic. “We believe the landscape of the IPOs this year is based on our positive anticipation of the market. However, investors should be careful in selecting which IPO to invest in given their different business natures. We advise you to focus on the valuations and opportunities in the sectors,” he said.

Similarly, the vice president of investment company Tradeview Capital, Tan Cheng Wen anticipates that Malaysia’s IPO landscape will continue to grow in 2024. He said that there are currently around 20 upcoming IPOs listed with an approximate value of RM1.5 billion – and this figure may increase depending on investors’ interest.

Tan also noted that with the normalisation and potential rate cuts by the US, interest in the Malaysian capital market is expected to rekindle. “The likely improvement of market conditions could spur more listing activities and, hence, IPO trends will remain robust this year,” he said.

Unlike Thong, however, Tan believes that the IPO landscape in Malaysia this year will not be dominated by any particular sectors. Instead, it will be characterised by significant diversity and variation.

Lastly, the chief economist of Bank Muamalat, Dr Mohd Afzanizam Abdul Rashid also agreed that the appetite for IPOs in Malaysia will further improve. “The equity market tends to be positive when global central banks start easing their monetary policy,” he said, adding that while the market is volatile, it is very much centred upon the prospect of rate cuts in the US.

(Sources: Ernst & Young [1, 2], New Straits Times)

• TAGS:
• Bank Muamalat
• Dr Mohd Afzanizam Abdul Rashid
• Ernst & Young (EY)
• EY Global IPO Trends Report
• Initial Public Offerings (IPO)
• Rakuten Trade
• Tan Cheng Wen
• Thong Pak Leng
• Tradeview Capital