Buoyant capital mart seen in 2012

Malaysia’s capital market will stay healthy next year despite the global downturn, led by consolidation in the energy and property sectors and fund-raising by banks to meet heftier capital requirements, JP Morgan’s local investment banking head said.

Analysts expect capital market activity to slow to a trickle worldwide in 2012 due to Europe’s deepening debt crisis and a lackluster US economy, but Didi Yahya said Malaysia’s market should still see a significant number of deals although he did not provide a forecast.

The Malaysian bourse saw 27 listings so far this year which raised US$1.91 billion, compared with 29 in 2010 when economic growth accelerated to a 10-year high of 7.2 per cent.

Yahya said the country’s Economic Transformation Programme (ETP), a US$444 billion government initiative to boost investment and raise national income, would offset external weakness and help invigorate the Malaysian market.

“There are a number of ETP oil and gas projects, and infrastructure projects going on,” he said in an interview. “A lot of these will need debt, but some will need equity as well”. Consolidation in major sectors such as oil and gas and property would spur domestic merger and acquisition activity, while banks would look to raise funds to meet Basel III capital requirements, Yahya said.

Recent Malaysian merger and acquisition activity has been led by property, energy and banking firms. State-controlled builder UEM Land Bhd took over rival Sunrise Bhd last year while government asset manager Permodalan Nasional Bhd made a bid for SP Setia Bhd in September.

“On the whole, the larger IPOs (in Malaysia) have performed better than other markets, even Hong Kong,” Yahya said. “When you look at the numbers itself you can probably get more of a premium valuation here because there’s a lot of domestic liquidity from the government institutions and even from retailers generally.”

He said there were also expectations that privatised entities such as satellite television operator Astro All Asia, power producer Malakoff and gaming conglomerate Tanjong could be relisted.

“It’s quite simple in terms of IPOs,” Yahya said. “A number of Malaysian companies have been taken private and...if these come back to the market, they will be billion-dollar type of deals.” -- REUTERS