The stalling of Malaysia's once-inspired IPO market is threatening to turn into a slump, weighed down by a worsening economic outlook, currency volatility and dismal performances by some of last year's biggest debutantes.
Sentiment has turned so adverse that even the presence of cornerstone investors may not assure a positive market debut. Malakoff, Malaysia's largest initial public offering so far this year, attracted droves of institutional investors in a sale that raised 2.74 billion ringgit ($769 million). Yet the power producer ended unchanged from its IPO price on its first day of trade on Friday.
The lackluster performance was preceded by price declines in some of last year's largest market debutantes. Since June 2014, Boustead Plantations has dropped 14 percent from its IPO price with the recent commodities bust, while Icon Offshore has plunged a steeper 69 percent.
As yesterday's stars fall to earth, potential IPO candidates find they have more convincing to do when they approach investors. While big companies like Edra Global Energy, part of a state fund, can still lure domestic institutional funds with their sizable assets, small firms and start-ups are staying away. Some are even considering raising funds abroad.