PETALING JAYA: Investment banks in the country are bearing the brunt of the global financial crisis as investors flee capital markets, with the outlook remaining poor in the next 12 months, industry players said.

On Bursa Malaysia, total trading volume plunged 61% from January to September with market value tumbling 44%, according to data from the local bourse.

Demand is expected to remain weak for at least the next 12 months amid the current challenging environment, an industry player said.

OSK Investment Bank, ECM Libra Investment Bank and TA Securities, which have a broader base of retail clients, were the most affected by the weakening market.

Besides Malaysia, OSK also has broking operations in Singapore and Hong Kong while CIMB Investment Bank and HwangDBS Investment Bank have operations in Singapore.

The financial turbulence has also led to fewer companies being listed on the local stock market, with 19 companies listed on Bursa since January.

“Companies that were planning listing exercises would mostly have a wait-and-see position as the full effect of the global financial crisis is yet to be felt in our economy,” an industry player said.

The biggest initial public offering (IPO) so far this year was Perwaja Holdings Bhd, which raised RM173.5mil from its IPO in August.

The number of mergers and acquisitions this year also paled in comparison to last year, which saw mega deals like the privatisation of Maxis Communications Bhd and the super merger of three large plantations groups to create the largest listed plantation player in the world in Sime Darby Bhd.

On a brighter note, Aseambankers Equity Research head Vincent Khoo, sees more privatisation and acquisitions in the offing as valuations of assets have gone down significantly.

“The Islamic market will also continue to see activity, especially within the fixed income segment,” he said.