Clearly, something is amiss with the IPO process. The poor performance of new listings hurts investor confidence and depresses overall valuations on the Malaysian bourse, which in turn affects companies’ ability to raise funds in the future.
It is no big revelation that initial public offerings (IPOs) on Bursa Malaysia have performed poorly. Yes, a select few have done very well post-listing, but the majority have lagged the FBM KLCI. Chart 1 shows the median (that means more than half) share price performance of IPOs listed between 2023 and 2025 relative to the benchmark index — in a broad declining trend. Last year, Bursa saw a record number of IPOs, but two out of every three new listings — across small and big caps on both the Main and ACE markets — ended the year below their IPO prices. We explored this troublesome trend at the beginning of this year. Share prices are ultimately driven by underlying earnings. And what we found was that 57% to 61% of IPOs listed in 2023 and 2024 reported lower net profit in the year immediately after listing compared to pre-IPO levels — even though they had reported rising net profit for three straight years before going public (see Chart 2).
We did a further analysis on IPO price performance by time from listing (see Chart 3). For the majority of stocks, prices started falling within days of their debut, most notably after the first month. We are quite certain most retail investors know this, which explains why massive IPO oversubscription does not translate into sustained demand for the stocks post-listing. Volume dries up quickly — because investors understand the money is made from successful IPO subscription, not buying in the market. (Of course, there is a small percentage of IPOs that do outperform post-IPO.) What we are trying to say is that oversubscription is not a reflection of quality.
