Malaysia’s IPO surge may slow over recession fears as weak US data shakes global markets

Fears of a US recession may cool the momentum of fresh listings on Malaysia’s stock market, experts say, despite global markets recovering from Monday’s sharp losses following weak US manufacturing and employment data.

More than US$6 trillion was wiped out from stocks worldwide on Monday, as investors were burned by the combined weight of US recession fears, overextended tech stocks and Japan’s aggressive policy tightening.

Malaysian stocks were not spared the rout, with some triggering circuit-breakers to stop their value free-falling, raising concerns that it could crimp the pipeline of initial public offerings (IPO) that had promised to add billions of ringgit in value to Malaysia’s bourse.

“There is always the possibility [of IPOs getting derailed], as the nature of equities is very fluid,” said Mohd Afzanizam Abdul Rashid, chief economist at Bank Muamalat.

Malaysian IPOs have raised about US$674 million as of July this year, surging nearly 15 per cent from the same period in 2023, according to a Reuters report.

Minimart chain operator 99 Speed Mart is reportedly lining up a September market debut to raise US$509 million, potentially the biggest IPO in seven years. Meanwhile, mobile communications provider U-Mobile is also reportedly planning a US$500 million listing.

Investor sentiment has been lifted by the political stability provided by Prime Minister Anwar Ibrahim’s government, allowing for greater focus on policymaking and implementation, according to Raymond Chooi, regional head of equity capital markets at Maybank Investment Banking.

“We expect IPO volume for 2024 and 2025 to trend upwards from the 3.5 billion ringgit [US$740 million] completed in 2023,” Chooi said.

But analysts warn swifter-than-expected cuts to US