IPO momentum slows, but market holds steady

New Straits Times

13-05-2025

KUALA LUMPUR: Heightened global uncertainty, largely stemming from escalating trade tensions, has dampened sentiment across equity markets, putting pressure on initial public offerings (IPOs)—and Malaysia is no exception.
Despite the global downturn in IPO activity, Universiti Kuala Lumpur Business School economic analyst Associate Professor Aimi Zulhazmi Abdul Rashid said Malaysia's domestic economy remains resilient.
"The domestic business climate is certainly good and flush with liquidity. Among them is the lowering of the statutory reserve requirement, while the overnight policy rate is held firm at 3.0 per cent for almost two years, creating financial stability and encouraging positive business growth in all economic segments.
"As the export data continue to be challenged by global development, the domestic economy is healthy with low inflation at 1.5 per cent and double-digit growth in the construction industry," he said.
As of now, Bursa Malaysia has recorded 20 IPOs for the year, with 17 on the ACE Market and three on the Main Market. However, most of these listings have seen underwhelming performances, reflecting weak investor confidence.
A notable example is Fibromat (M) Bhd, which debuted at 46 sen—representing a 16.36 per cent discount from its IPO price of 55 sen—highlighting the effects of ongoing market volatility.
The challenging environment has also led to postponements of several planned IPOs.
Cuckoo International (MAL) Bhd, which was scheduled to list on the Main Market on April 30, has delayed its debut by two months. Similarly, SPB Development Bhd has pushed back its IPO indefinitely, missing its earlier target date of April 21.
According to UOB Kay Hian Wealth Advisors Sdn Bhd head of investment research, Mohd Sedek Jantan, the ongoing trade tensions and investor caution are key factors behind the postponements.
"The gap between Trump's trade rhetoric and concrete policy outcomes continues to fuel investor hesitancy. This uncertain environment necessitates careful IPO timing and a strong emphasis on fundamentals to navigate ongoing market turbulence.
"Persistent external risks—including the threat of retaliatory measures from China or other trading partners—may further intensify delays, as companies confront growing concerns from stakeholders across their value chains," he told Business Times.
Beyond immediate market implications, Mohd Sedek noted that the slowdown in IPOs could have longer-term effects on corporate governance.
IPOs are vital for driving board transitions, attracting new directors, and aligning companies with evolving regulatory standards.
"A prolonged IPO drought risks stagnating this dynamism, especially for high-growth sectors like tech and electrical and electronics. Reviving IPO activity is therefore essential, not merely for revitalising capital markets but for reinforcing the adaptive capacity of Malaysia's corporate governance ecosystem," he said.
Malaysia's experience mirrors a global trend. Economic and geopolitical uncertainties have prompted IPO delays worldwide.
In the US, protectionist trade policies have curtailed capital-raising efforts. India has also seen IPO deferments, with Avanse Financial Services and Anthem Biosciences among the latest to postpone listings.
In Europe, fashion e-commerce giant Shein has paused its anticipated London IPO, joining a growing list of delayed debuts that includes Shawbrook Group and fintech firm Ebury.
Looking ahead, Mohd Sedek believes Bursa Malaysia could still approach its annual target of 60 IPOs—but cautioned that ongoing uncertainty may temper expectations.
"Unless market conditions stabilise significantly and the existing pipeline materialises without major delays – potentially closing the year with 50 to 55 listings, broadly in line with its 2024 performance," he added.