Initial Public Offering (IPOs) used to be popular, mostly it allows investors to invest in a company at a discounted rate. It also means the opportunity cost of investing money in a company that has not been listed on the stock market.
For the year to Aug 29, there’re about 26 IPOs came onstream, compared with 21 last year. Based on statistics, the value of new IPOs has been lower so far compared to last year.
IPOs Listed on Bursa Malaysia in 2011
When the market is trending up, IPOs provides you with an opportunity to make money. However, if an industry on downtrend then this can impact the IPOs value that list in that segment. Then, your chances of making money are lower than companies with better valuations and operating in an industry that is on an uptrend.
My advise is try to limit your IPOs investment to larger companies with market capitalization of approximately RM1 billion. Also, it’s important to evaluate and select those IPOs in which the companies businesses are not over exposed to external environments when there’s global economic crisis.