PETALING JAYA: Although market sentiment has improved over the past months, any company planning to go public would be wise to wait for clearer recovery signals from economic and financial markets before acting, most analysts and fund managers said.

“If you don’t need to raise funds urgently, you should wait until the market goes up higher to get better value for your company,” TA Securities head of research Kaladher Govindan said.

Kaladher does not see the current liquidity-fuelled local market undergoing a steep correction anytime soon and targets the key FTSE Bursa Malaysia KL Composite Index (FBM KLCI) to reach 1,200 points by year-end. The benchmark index ended at 1,156.43 points yesterday.

Most economists believe that faltering global markets have already bottomed. However, their economies would not see any sustainable recovery until next year, they said.

“Next year would probably be a better time for companies considering initial public offerings (IPOs). Valuations also hold up better in more stable markets,” ECM Libra Capital Sdn Bhd acting head of research Ching Weng Jin concurred.

Shoe company Xingquan International Sports Holdings Ltd, which was listed on Bursa Malaysia last month, saw its share price fall to close at RM1.42 yesterday, some 17% below its retail IPO price of RM1.71 and 21% below its institutional IPO price of RM1.80.

As a result of subdued economic conditions and a volatile stock market environment, the local IPO market has been grim since the beginning of the year.

So far this year, there have been only two listings on the local bourse – June saw the first listing of the year – industrial chemicals distributor Samchem Holdings on the main board, followed by Xingquan, also on the main board and the first overseas company to list here, on July 11.

Bursa Malaysia attracted 23 listings last year and 26 in 2007, down from 40 three years ago. Chief executive officer Datuk Yusli Mohamed Yusoff had said that over the next six months, if it “gets the same number as last year”, it “would be good.”

The Securities Commission approved seven IPO applications in the second quarter of 2009, bringing the total to eight so far this year.

The seven approved IPOs had a potential market capitalisation of RM1.76bil and were expected to raise RM566.3mil, the SC said.

There are another 27 companies whose IPO applications have been approved since last year.

Areca Capital Sdn Bhd chief executive officer Danny Wong said while it wasn’t the best time to get listed, it was “better” timing than in previous months.

“Sentiment has improved greatly, there is liquidity and the news of the possible relisting of Maxis Communications Bhd by year-end is expected to create some excitement in the market,” he said. He also noted that in the current low interest rate environment, investors were attracted to place their money into equities as opposed to fixed income for better returns.

“I believe our (impending) listing is very timely as investor sentiment and confidence have improved significantly over the last few months,” TAS Offshore Bhd managing director Datuk Lau Nai Hoh told StarBiz yesterday.

The company, involved in shipbuilding for the oil and gas sector, is expected to list on the main board by the end of next month.

“Better market conditions are always by default, better times to list,” said Pong Teng Siew, research head at Jupiter Securities.

However, from an investor’s point of view, they did not mark an excellent time to begin investing in the market because new listings, especially large ones, often absorbed liquidity and “sap the strength” of rallies, Pong said.