KUALA LUMPUR: The Malaysian initial public offering (IPO) market has emerged from the pandemic with a 102 per cent increase in the proceeds raised at US$681 million, said Deloitte.
In a statement today, the management consulting company said the surge had been driven by investors' demand for good fundamental companies.
In particular, the number of ACE Market listings doubled from 11 in 2021 to 22 in 2022, which is impressive given the economic climate, the firm noted.
"The interest rate hike would potentially encourage more companies with good business fundamentals to seek listing as they can leverage on the equity market for a diversified and cheaper funding base," it said.
Deloitte Malaysia's disruptive events advisory leader Wong Kar Choon said that notwithstanding the impact of the elections on the IPO market, there remains a steady pipeline of companies looking to tap the capital markets.
"The strong performance in 2022, against a backdrop of global inflation, rising interest rates, and the threat of a recession, is proof of the resilience of the Malaysian capital market," he said.
As compared to the region, Deloitte data as of November 11, 2022, showed that companies in Southeast Asia raised US$6.3 billion from 136 IPOs to date this year (52 per cent), down from a record US$13.3 billion from 152 IPOs in the full year of 2021.
Deloitte said this indicates a higher number of small listings this year, mostly from smaller companies that needed the platform to raise funds in today's challenging market environment.
"With only two blockbuster IPOs this year—PT GoTo Gojek Tokopedia Tbk and Thai Life Insurance—this could mean that the bigger companies are holding out and postponing their listing in anticipation of better market conditions," it said.
Deloitte added that the Covid-19 pandemic spurred a flood of new retail investors into the stock market, and consequently, there was a boom in the IPO market globally in 2021, with the US and the UK witnessing a record amount of IPO funds raised.
"Southeast Asia capital markets, too, enjoyed a successful year in 2021.
"This momentum slowed down this year, albeit with Southeast Asia weathering the crash slightly better with a 52 per cent drop, compared to the 95 per cent and 91 per cent decrease in IPO proceeds in the US and the UK, respectively," it added.