Bursa sees lower total IPO value in 2018 as smaller listings dominate

The exchange is now seeing more IPOs being submitted for approval as the market stabilises

By NG MIN SHEN / Pic By ISMAIL CHE RUS

Bursa Malaysia Bhd is expecting the total value of capital raised from domestic initial public offerings (IPOs) this year to be less than the RM21 billion registered in 2017, although it foresees more IPOs in 2018 compared to 2017.

CEO Datuk Seri Tajuddin Atan said there were 13 listings in 2017, with a total value of about RM21 billion.

“We have already seen 11 listings in the first half ended June 30, 2018 (1H18), so I think the (total) number should easily reach 15 to 16. But the 11 listings so far only have a total value of about RM2 billion.

“We don’t have a big pipeline at this point in time — hopefully a few more will come in, but the value will be lesser than last year,” he told a media briefing on Bursa Malaysia’s 1H18 results in Kuala Lumpur yesterday.

He said the exchange is now seeing more IPOs being submitted for approval as the market stabilises following the more cautious approach seen before and immediately after the 14th General Election.

“There are a few more coming in especially for the ACE (Access, Certainty, Efficiency) Market and hopefully, a few more for the Main Market.

“We are hopeful that once the dust settles and there is more clarity on policies and direction under the new government, we will go back to business and see more IPOs,” Tajuddin said.

People are now moving away from politics and looking into growing their businesses, he added, which in turn will boost capital markets.

Of the 11 listings seen in 1H18 that raised some RM2 billion, five were on the ACE Market, five were on the LEAP (Leading Entrepreneur Accelerator Platform) Market and just one was on the Main Market.

In comparison, 1H17 saw eight listings which raised RM3.5 billion, while six Main Market listings took place throughout the full year.

Tajuddin attributed the lack of large listings this year to a lack of readiness on the part of companies, noting that his team is “on the lookout for bigger companies to come on board”.

“There are a few big companies yet to be ready (for listing). They were supposed to be ready earlier, but somehow or other they couldn’t come board. Hopefully, they will repackage themselves and make sure they are ready to be listed,” he said.

He added that the exchange’s focus is on ensuring potential IPOs have the highest levels of governance and are able to provide benefits for their investors.

On the initiatives introduced under the previous administration to boost trading and local stock market liquidity, Tajuddin said these have positively impacted the capital markets, noting that the six-month waiver on trading and clearing fees for new individual investors resulted in a 27%, or RM400 million, increase in total domestic retail trading volume in 1H18 from 2H17.

As for the government’s proposal to be part of an Asean trading link instead of the initial plan to link with the Singapore Stock Exchange, Tajuddin said the exchange and its regulator, the Securities Commission Malaysia (SC), have been tasked by Finance Minister Lim Guan Eng to review connectivity options.

“His direction to us and to the SC is to look at it from a bigger perspective, so we will have to do more ground- work to see how we can make this successful with regard to Asean connectivity, and see what we can learn from the failed Asean Trading Link.

“There is a value proposition to Asean connectivity — Asean has a population of 600 million and over 3,000 listed companies,” he added.

Meanwhile, on speculation that his contract will be terminated ahead of its expiry on March 21, 2019, Tajuddin said the exchange does not comment on rumours, adding that they “have not had any calls or speculation in that area”.

Bursa Malaysia’s net profit fell 2.2% to RM58.21 million in the second quarter ended June 30, 2018 (2Q18), from RM59.54 million reported a year ago, while quarterly revenue dipped 1.5% to RM140.56 million from RM142.67 million registered the year earlier.

In an exchange filing yesterday, the group said profit from the securities market slipped 1.9% to RM87.2 million in 2Q18 from RM88.9 million previously mainly due to lower trading revenue, which in turn was due to lower effective clearing fee rate as a result of a higher proportion of trades subject to the clearing fee cap.

The group has proposed a first interim dividend of 14 sen per share and a special dividend of eight sen per share for the financial year ending Dec 31, 2018, amounting to approximately RM177.6 million payable on Aug 29, 2018.

For 1H18, Bursa Malaysia’s profit rose 5% to RM121.995 million from RM116.17 million on higher profit and net fair value changes in quoted shares in 1H18 compared to 1H17.

1H18 revenue was 2.1% higher at RM291.27 million compared to RM285.36 million achieved in the previous year.