Thursday 28 Mar 2024
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KUALA LUMPUR (Sept 19): The fallout from the 1Malaysia Development Bhd (1MDB) scandal has hit the initial public offerings (IPO) market, reports The Wall Street Journal (WSJ).

Malaysia, the business daily said yesterday, must now put up with a drought in IPOs and deals that shows no signs of ending after companies yanked out deals worth almost US$2 billion (RM8.42 billion), citing weak economic conditions.

But WSJ said controversy surrounding 1MDB, which has racked up debts of RM42 billion in six years, has worsened the IPO market, amounting to US$2.86 billion so far this year, down 54% from last year.

Mergers and acquisitions were also hit, it said, citing data which showed a slump from US$12.76 billion in the same period last year to US$6.73 billion so far this year.

“Investors want the dust to settle before planning any fundraising or investments,” Bernard Aw, a Singapore-based market strategist, was quoted as saying in reference to the political events surrounding 1MDB.

Malaysians took to the streets on August 29 and 30 in the Bersih 4 rally to demand Prime Minister Datuk Seri Najib Razak’s resignation over the 1MDB scandal and claims that RM2.6 billion from a Middle-Eastern donor was deposited into his personal accounts ahead of the 2013 general election.

The country has also been hit hard by the fall in crude oil prices, since the government derives up to 22% revenue from the oil and gas sector.

Yesterday, the ringgit ended one of its longest weekly losing streaks against the dollar, closing at 4.2043, but analysts said the rebound may be short-lived.

Najib, who is also finance minister, has tried to prop up the stock market. On Monday, he announced an economic stimulus package, with RM20 billion allocated to state-owned fund manager Valuecap Sdn Bhd.

More than US$500 million in listings have been cancelled this year, including Weststar Aviation Services Bhd, and palm oil producer Sime Darby Bhd.

The biggest IPO this year, said WSJ, was Malakoff Corp in April. It raised RM2.74 billion.

“The current set of problems affecting the country is beyond the scope of short-term stimulus measures,” WSJ quoted Singapore-based DBS as saying in a recent note.

 

 

 

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