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| IPOs struggle against negative sentiment By Izwan Idris HAVE initial public offerings (IPOs) lost their lustre? Last week, second board companies Top Glove Bhd and SKB Shutters Corp Bhd became the latest casualties. Both counters closed well below their offer prices, to the dismay of those who had applied for the shares. However, these two counters were not unique cases. Market observers noted that none of the seven newcomers to the KLSE, since the beginning of the year, were trading above their IPO prices. Among them were gems which would have easily chalked up decent premiums, had they gone to the market earlier. Main board-listed Ranhill Bhd and second board Haisan Resources Bhd did manage to close in positive territory on their first day of trading but succumbed to persistent selling pressure within a few days. "It would be unfair to say that only these counters were affected or it's only confined to our local market. IPOs all over the world had not been performing well recently,'' an analyst said. "It's more about sentiment than anything else. It's a bit unlucky for these counters to be listed at the time when market sentiment is at the lower end,'' he added. He noted that the general slowdown in the economy, the technology meltdown in the US markets and issues relating to investor confidence had all contributed to the generally sluggish state of the KLSE. As market sentiment continues to be dominated by uncertainties and the lack of liquidity in the KLSE, investors tend to be selective and cautious about their investment. "It seems many are willing to take their losses as they anticipate the worst is yet to come. "Otherwise, we won't see the kind of pattern we are seeing now where investors sold off their holdings aggressively in the first few days after the stock made its debut,'' a dealer said. Analysts had also mentioned that some of the valuations for these counters were no longer relevant in the current market condition. "Taking into consideration that the long process the companies had to undergo before the actual issuance of the prospectus, some of the figures and projections used might be out of date,'' an analyst said. "Also the financial ratios which seemed reasonable a few months ago are now viewed as expensive,'' another analyst said. A local fund manager said investors' appetite for the new issues had somewhat waned. "People, especially retailers, don't seem eager to buy into these shares,'' he added. However, he pointed out that institutional investors were keen to participate in some stronger issues such as the Bintulu Port Holdings Bhd whose IPO saw strong participation from both local and foreign institutional players. "However, it's impossible to speculate on what will happen on the actual day of listing,'' he said, referring to Bintulu Port's planned listing in mid-April. |
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| Investors wary of IPOs By Joseph Chin and Khairul Annuar Investors have more cause to be wary of initial public offerings judging from the disappointing debuts this week of SKB Shutters Corp Bhd and Top Glove Corp Bhd, analysts say. The Second Board newcomers opened below their IPO prices and have yet to recover. SKB Shutters ended its maiden day on the Kuala Lumpur Stock Exchange at RM1.20, a loss of 30 sen over its IPO of RM1.50, with 3.02 million shares traded. The manufacturer of roller shutters and steel doors had a public offer of 4.74 million shares, which was oversubscribed by 2.41 times. Latex glove producer Top Glove ended its first day on the bourse 90 sen in the red, at RM1.80, with 2.75 million shares transacted. The company had offered to the public at RM2.70 apiece 7.51 million new shares, and the offer was oversubscribed by 0.33 times. Among the reasons cited by analysts for Top Glove's poor performance on the IPO day was that investors feared the company's projected earnings might be beyond reach as the economic outlook turned gloomy and market competition stiffened. Judging from this week's record, analysts said it would be difficult for companies to tap public funds through IPOs in the current bearish market. 'It is no use to apply for a listing as the share price will probably be lower than the IPO on the day of listing,' said an analyst. However, other companies that had completed their preparations for a flotation would have no choice but to go through with their planned listing. An institutional dealer with a local brokerage said in view of the recent performances of SKB Shutters and Top Glove, the 'window of IPO market looks dicey.' He said even a company with good fundamentals could not be guaranteed of full subscription of its shares if it were to seek a listing at this time. He added that earnings projections are made three months before a company is listed, and with the stock market heading south and the uncertain economic situation, some research houses had lowered their valuations before they could make it to the KLSE. 'Now, underwriters have to work hard to convince the investors. If it is a good issue, it stands a chance of being fully subscribed. However, the company's offer price may not reflect its performance, and vice-versa,' he said. Just last week, the public portion of D'nonce Technology Bhd's public offering was undersubcribed by 15.78 per cent, while the portion reserved for its staff and business associations saw only a 25.2 per cent subscription rate. And, the company was making a public offering of only seven million shares, at RM2 each. As for property-based Merge Housing Bhd, which is enroute to a Main Board listing, the bearish market sentiment had prompted it to extend the public offer deadline by a week, to March 28. Merge was offering to the public 22.5 million shares at RM1.80 each. Another company that will make its debut on the Main Board - scheduled for April 16 - is Bintulu Port Holdings Bhd. The public portion of 32.66 million shares in its offering at RM2 each was oversubscribed by 1.12 times. As for other recent listings, Ingress Corp Bhd ended its first day on the Second Board at RM1.76, a discount of 44 sen over its IPO price of RM2.20. A total of 4.28 million shares were traded. Its public offer of 8.81 million shares was oversubscribed 2.38 times. Time dotCom Bhd, which was listed on the Main Board on March 12, lost 87 sen on the day to close at RM2.43. The IPO of 571 million shares, at RM3.30 each, was under- subscribed by 75 per cent. Today, SKB Shutters closed at RM1.13 with 117,000 shares traded, Top Glove (RM1.55 with 315,000 shares traded), Ingress (RM1.50 with 72,000 shares traded) and Time dotCom (RM2.08 with 1.24 million shares traded). An analyst said the upside to these IPOs was that 'there should not be any further downside to these stocks.' 'In terms of valuation, if SKB Shutters and Top Glove could achieve their forecast earnings, then they could be considered cheap,' he said. |
| From: DAP MALAYSIA <dap.malaysia@p...> Date: Tue Apr 3, 2001 4:32pm Subject: [BUNGARAYA] TMT manipulations of KLCI again yesterday ------------------------------------------------------------------------- This is the list for the Democratic Action Party of Malaysia. To subscribe, send "subscribe" in email body to <bungaraya-request@l...> ------------------------------------------------------------------------- Media Conference Statement (3) by DAP National Chairman Lim Kit Siang at DAP PJ Hqrs on Tuesday, April 3, 2001 at 11.30 a.m.: Call for Securities Commission and KLSE investigation into the last three-minute manipulation of the stock market by TMT stocks for the past three months ====================================================== On 24th March 2001, I had called on the Securities Commission and the Kuala Lumpur Stock Exchange to investigate market manipulations in the stock market through massive institutional purchases of TMT stocks- Telekom Malaysia Bhd, Malayan Banking Bhd and Tenaga Nasional Bhd - in last three minutes of trading to jack up the Kuala Lumpur stock exchange composite index (KLCI). I had referred in particular to what happened on 21st March 2001 when the local bourse had earlier in the day plunged to a 23-month low of 638.5 points in early trading after investors dumped heavyweights, but at the end of the day's trading, the KLCI rebounded strongly to close at 673.24 following institutional buying of the Big Three "TMT" stocks - Telekom Malaysia Bhd, Malayan Banking Bhd and Tenaga Nasional Bhd - especially in the last three minutes of trading. It had been conservatively estimated that RM19 million worth of purchases for the Big Three "TMT" stocks took place in the last three minutes on 21st March and that in the last 30 seconds, the KLCI was pushed up 13.18 points from 660.06 to 673.24. Such institutional manipulation of the KLSE in the last few minutes of trading again took place on Friday, 23rd March 2001, when some RM16 million of institutional interventions through the TMT stocks in the last two minutes before the end of trading pushed up the KLCI by two points in the last 30 seconds from 667.26 to 669.27 at 5 p.m. The three government-controlled TMT stocks of Tenaga, Maybank and Telekom together make up almost 40 per cent of the index's capitalisation and wield a powerful influence on market direction. Last Friday KLSE executive chairman Mohd Azlan Hashim denied that there had been price manipulation in blue chips to shore up a sliding Malaysian market. He said: "When you talk about movement in the marketplace, it is not really that unusual or something that you don't expect to see." He said the KLSE surveillance and investigation divisions monitored the market continuously and would investigate the situation if warranted. I am flabbergasted by such complacency shown by the KLSE executive chairman which is not calculated to enhance public confidence in corporate governance and integrity of the KLSE. Yesterday, such last-minute institutional manipulation of the stock market to boost up the KLCI before the end of trading again took place where over six million ringgit purchases of the TMT stocks pushed up the KLCI in the last minute of trading by 4.77 points from 645.97 points at 4.59 p.m. to 650.74 points at 5 p.m. If not for the last-minute RM6 million institutional intervention to purchase the TMT stocks, jacking up the KLCI by 4.77 points, the KLCI would have ended yesterday lower than Friday's index of 646.13, which would not look good especially when the Prime Minister, Datuk Seri Dr.Mahthir Mohamad would be presenting the Third Outline Perspective Plan (2001-2010) in Parliament today. It is not very flattering for the transparency and integrity of the KLSE that it could be so easily manipulated just to create the "feel good" atmosphere for the Prime Minister to present the OPP3 in Parliament! Indeed alarming questions are raised by yesterday's last-minute institutional interventions to buy over RM6 million TMT stocks, as illustrated by the following: Stock 4.59 pm 5 pm last-minute last-minute change volume KLCI 645.97 650.74 4.77 pts Price Tenaga RM11.60 RM12.10 200 lots Maybank RM12.40 RM12.60 500 lots Telekom RM11.60 RM11.70 200 lots Questions crying out for answer are: 1. How did Tenaga's price jump 50 cents in the last minute from 4.59 p.m. to 5 p.m.? If there had been institutional manipulation of the KLSE in the last minute of trading, could there be abuses where private individuals in the know could buy in at lower prices at the beginning of trading to benefit from the last-minute institutional purchases at artificially jacked-up and pre-determined prices? 2. The price of Telekom was RM11.60 at 4.57 p.m. There was no trading for the next two minutes of 4.58 p.m. and 4.59 p.m. How did it jump ten sen to RM11.70 in the last minute? 3. What are the funds running into millions and even tens of millions of ringgit involved in the last-minute institutional purchases to manipulate the KLCI - were EPF, Pensions Trust Fund, Tabung Haji and other government-linked funds and agencies involved? Despite the denial by the KLSE executive chairman of last-minute institutional interventions in the KLSE to manipulate the KLCI, I understand that such stock market manipulations have been going on for the past few months. The Securities Commission and the KLSE must act firmly to protect their own credibility as well as the transparency and integrity of the stock market by launching a comprehensive inquiry into stock market manipulations, particularly in the last few minutes of trading in the past three months. I propose meeting the KLSE executive chairman Mohd Azlan Hashim on these market manipulations and to ask for the records of all stock market trading in the last few minutes in the past few months, as KLSE possesses such records - unless these information have suddenly become a state secret under the Official Secrets Act. - Lim Kit Siang - |
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| Wed Apr 25, 2001 2:08 pm Stock market abuses, TMT, nomminee accounts & EPF Media Statement by DAP National Chairman Lim Kit Siang in Petaling Jaya on Wednesday, April 25, 2001: Securities Commission has failed in its statutory responsibility to promote fair and transparent securities market in not investigating manipulation in the late buying support on the KLSE ============================================================ The Securities Commission (SC) Chairman Ali Abdul Kadir said yesterday that the SC will not hesitate to act if there is strong evidence that there is manipulation in the late buying support on the Kuala Lumpur Stock Exchange (KLSE). The Securities Commission has failed in its statutory responsibility to promote fair and transparent securities market when it has failed to investigate manipulation in the late buying support on the KLSE. Since 24th March 2001, I had called on the Securities Commission to investigate market manipulations in the stock market in the previous three months through massive institutional purchases of TMT stocks- Telekom Malaysia Bhd, Malayan Banking Bhd and Tenaga Nasional Bhd - in last three minutes of trading to jack up the Kuala Lumpur stock exchange composite index (KLCI). In the past month, I had given three specific instances: 1.On 21st March 2001 when the local bourse had earlier in the day plunged to a 23-month low of 638.5 points in early trading after investors dumped heavyweights, but at the end of the day's trading, the KLCI rebounded strongly to close at 673.24 following institutional buying of the Big Three "TMT" stocks - Telekom Malaysia Bhd, Malayan Banking Bhd and Tenaga Nasional Bhd - especially in the last three minutes of trading. It had been conservatively estimated that RM19 million worth of purchases for the Big Three "TMT" stocks took place in the last three minutes on 21st March and that in the last 30 seconds, the KLCI was pushed up 13.18 points from 660.06 to 673.24. 2.On 23rd March 2001, when some RM16 million of institutional interventions through the TMT stocks in the last two minutes before the end of trading pushed up the KLCI by two points in the last 30 seconds from 667.26 to 669.27 at 5 p.m. 3.On 2nd April 2001, some RM6 million institutional purchases of the TMT stocks in the last minute of trading pushed up the KLCI by 4.77 points from 645.97 points at 4.59 p.m. to 650.74 points at 5 p.m. so that the Prime Minister, Datuk Seri Dr. Mahathir Mohamad could present the Third Outline Perspective Plan (OPP3) to Parliament the next day with a good KLCI index. Although the market manipulations in the stock market through massive institutional purchases of TMT stocks- Telekom Malaysia Bhd, Malayan Banking Bhd and Tenaga Nasional Bhd - in last three minutes of trading had stopped after April 2, 2001, Malaysians expect the Securities Commission to take actions for: Firstly, a full, independent and public inquiry into stock market manipulations through the three government-controlled TMT stocks of Tenaga, Maybank and Telekom - which together make up almost 40 per cent of the index's capitalisation - particularly in the last few minutes of trading in the first three months of the year. Secondly, a full public accounting as to what are the funds running into millions and even tens of millions of ringgit involved in the last-minute institutional purchases to manipulate the KLCI - were EPF, Pensions Trust Fund, Tabung Haji and other government-linked funds and agencies involved? The failure of the Securities Commission to investigate market manipulations in the stock market through massive institutional purchases of TMT stocks in the final minutes of trading to jack up the Kuala Lumpur stock exchange composite index (KLCI) in the first quarter of the year have greatly undermined investor and public confidence about its independence, professionalism, integrity and commitment to good corporate governance. Can Ali explain why the Security Commission, and in particular its department AWAS which monitors all buyers and sellers on the KLSE, was so prompt to haul up ordinary remisiers or politically-unconnected brokers for questioning for any irregular market price, as for instance, if a counter at RM5 suddenly ended trading at RM5.50 with one lot, but is to tardy and relucant to act on the suspicious last-minute multi-million ringgit manipulation of the KLSE in the first quarter of the year? Ali said the "last-minute buying" on the KLSE does not necessarily constitute market manipulation as one cannot punish investors for a "last-minute change of mind". I agree, but did Ali come to this conclusion after a full investigation or had he already made up his mind that there was nothing irregular or improper in such a phenomen in the KLSE in the first quarter of the year without the need for any investigations? As Securites Commission Chairman, Ali cannot be unaware of Section 84 of the Securities Industry Act (SIA) 1983,which states that "no such person shall create... or do anything that is calculated to create... a false or misleading appearance for active trading in any securities on a stock market", while Section 85 says "no person shall take part in... any number of transactions in securities in the effect of... a) raising, b) lowering or c) pegging, fixing maintaining or stabilising the prices of securities... which may include the purpose of inducing other persons... to acquire or dispose the securities of the corporation" and the opinion of legal experts that prima facie, the last-minute buying on index-linked counters are offences under the SIA. The Securities Commission should also explain what actions it has taken to prevent misuse of nominee accounts to manipulate the market. For instance, Cartaban Nominees (Asing) Sdn. Bhd and HSBC Nominees (Asing) Sdn. Bhd are very active player of the Tenaga stock. These are their shares transactions on Tenaga stock in March, 2001: Tenaga: ------ Cartaban Nominees (Asing) Sdn. Bhd: Acquired Disposed 1.3.01 125,000 86,000 2.3.01 504,000 81,000 5.3.01 585,000 78,000 7.3.01 85,000 289,000 9.3.01 84,000 26,121 12.3.01 31,000 40,000 13.3.01 31,000 192,000 14.3.01 5,000 49,000 15.3.01 23,000 209,300 16.3.01 90,000 72,000 19.3.01 - 76,000 HSBC Nominees (Asing) Sdn. Bhd 1.3.01 - 263,000 2.3.01 566,000 389,000 5.3.01 84,500 361,000 7.3.01 - 168,000 8.3.01 16,000 116,000 9.3.01 31,000 161,000 12.3.01 63,000 146,000 13.3.01 87,000 87,000 14.3.01 - 66,000 15.3.01 - 31,000 16.3.01 38,000 156.000 16.3.01 26,400 - 19.3.01 2,000 285,000 20.3.01 - 339,000 21.3.01 - 217,000 22.3.01 80,000 - 22.3.01 - 50,000 23.3.01 69,000 21,000 27.3.01 350,000 - 28.3.01 169,000 34,000 29.3.01 101,800 8,000 30.3.01 42,000 3,000 30.3.01 28,800 189,000 CHASE Malaysian Nominees (Asing) Sdn Bhd 1.3.01 657,000 - 8.3.01 318,000 - 15.3.01 56,000 - 22.3.01 - 954,400 These are their shares transactions on Telekom stock in March, 2001: Telekom: ------- HSBC Nominees (Asing) Sdn. Bhd 15.3.01 - 68,000 16.3.01 - 151,800 19.3.01 6,000 115,720 20.3.01 - 47,000 21.3.01 - 71,000 22.3.01 60,000 35,800 22.3.01 5,000 5,000 23.3.01 52,000 256,000 27.3.01 - 552,000 28.3.01 116,000 53,000 These are their shares transactions on Maybank stock in March, 2001: Maybank: ------- Cartaban Nominees (Asing) Sdn. Bhd: 16.3.01 - 228,000 19.3.01 - 167,800 20.3.01 - 314,400 21.3.01 - 70,200 22.3.01 - 996,554 26.3.01 - 1,104,400 27. 3.01 - 1,002,425 28. 3.01 142,000 - 29.3.01 - 320,602 30.3.01 - 139.600 2.4.01 - 32,070 3.4.01 - 122,000 4.4.01 166,600 HSBC Nominees (Asing) Sdn. Bhd 15.3.01 20,000 241,900 16.3.01 - 485,800 19.3.01 2,000 132,600 20.3.01 - 294,200 21.3.01 4,000 122,200 22.3.01 40,000 7,000 23.3.01 57,000 221,300 27.3.01 6,000 202,000 28.3.01 - 375,600 29.3.01 97,400 179,000 30.3.01 26,000 200,400 30.3.01 - 249,800 2.4.01 10,000 197,400 3.4.01 8,000 296,000 4.4.01 489,000 242,600 CHASE Malaysian Nominees (Asing) Sdn Bhd 15.3.01 - 306,000 22.3.01 - 2,066,300 29.3.01 - 833,400 It is very clear from the massive transactons of these nominee companies in the TMT stocks, a full inquiry is in order to establish whether they play any role in the late buying support of the KLSE through institutional purchases of the TMT stocks and if so, who are the beneficial owners of these nominee accounts. In this connection, I am most shocked that the Employees Provident Fund also uses nominee companies to invest heavily in the stock market. Can the EPF explain what percentage of its RM40 billion invested in equities are bought through nominee companies in the KLSE and the reason why it had to resort to nominee companies to hide its identity when operating in the stock market, raising disturbing questions of accountability, transparency and integrity. - Lim Kit Siang - |