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Monday, 7 August 2017

(The Star) Capital market momentum in Malaysia to continue in second half

KUALA LUMPUR: The capital market’s momentum seen so far is expected to continue in the second half of the year, says CIMB Investment Bank Bhd chief executive officer Datuk Kong Sooi Lin.

“With all the initial public offerings (IPOs) that occurred in the first half of the year, it is already better than the full year of 2016.

“With CIMB’s pipeline of deals, we think that this momentum will continue, with some probably flowing over to early 2018,” she told StarBiz.

She added that there may be a couple of mega-IPOs coming on board in the second half of the year or the first half of 2018.

Kong noted an estimated US$2bil was raised in terms of IPOs during the first half of the year.

From this figure, CIMB’s participation measured an estimated US$1.7bil.

In the first half of the year, Kong highlighted that equity capital market activities increased by 40% as compared to 2016.

“We definitely feel that there is an uptake in capital markets this year, and that there is generally a feel-good factor in the market.

“Last year was one of the worst years I have ever been through as an investment banker in the past 30 years.

“So, comparing to a low base in 2016, this year is definitely a bonus year with a much better outlook,” said Kong.

She opined that when the public says that the economy is not doing so well, it is likely because fresh graduates are finding it difficult to secure jobs.

Companies, having had to retrench employees and downsize their workforce, are avoiding having too much headcount, and instead are working on managing their business more efficiently, which includes incorporating technology.

As for the bond market, CIMB sees a strong demand for local currency bonds in Malaysia, Indonesia and Thailand.

The investment bank has a strong pipeline of bond issuances in Indonesia.

“In the Malaysian market, there is ample liquidity for foreign-owned companies which are seeking to raise funds here.

“We can raise fixed income, and if the timing is right, the companies can even tap into the equity market as well.

“We are looking at more infrastructure projects to come, such as the high-speed rail project and the East Coast Rail Link, which have attracted Chinese companies to Malaysia under the One Belt, One Road initiative,” said Kong.

Recently, CIMB, along with Maybank Investment Bank Bhd, raised RM400mil Islamic medium-term notes (sukuk wakalah) for China-owned water treatment company BEWG (M) Sdn Bhd.

This makes BEWG Malaysia the first China-owned company to raise sukuk for a water infrastructure project.

The investment bank continues to favour the consumer-related and healthcare sectors, being “hot” sectors with high demand from its clients, who are keen to invest in these sectors.

Though there may be sectors that have higher growth than others, CIMB prefers to select sectors that are safe.

Apart from that, CIMB has been doing a fair bit of getting its investment bank (IB) clients to be its private bank (PB) clients.

“PB clients can do deals in IB interchangeably and cross border.

“We gel PB and IB together, which allows us to cast a wider net.

“For PB clients who are more regional and global in their outlook, we ensure that our bankers introduce deals across the region to them.

“The landscape has changed today, with PB clients taking up a lot of the IB transactions,” said Kong.

Going forward, CIMB intends to build up its private banking in Indonesia and Thailand.