UOA Dev's weak debut not seen as omen

KUALA LUMPUR: Although shares of UOA Development Bhd had a poor debut recently, analysts don't think other listings will suffer the same fate.

They think UOA's stock performance was due to the property market having reached its peak while the initial public offering's (IPO) valuation leaves little upside on the first day of trading.

The stock closed 1 sen lower at RM2.59 on Wednesday and continued to fall yesterday, shedding 6 sen to RM2.53.

"The property market upswing cycle has reached near to its peak, even if this does not imply a downswing cycle will begin shortly," Jupiter Securities head of research Pong Teng Siew told Business Times yesterday.

Interest rates are expected to continue rising, which makes it more expensive for people and businesses to buy properties.

Mercury Securities head of research Edmund Tham attributed the lack of excitement to the developer's weak branding.

However, this does not imply the start of a spell when all IPOs will do badly, Pong said.

The stock market is due to welcome more listings this year.

MSM Malaysia Holdings Bhd, a sugar producer, is scheduled to be listed on June 28 while oil and gas service provider Bumi Armada Bhd is reportedly planning to raise about RM3 billion in an IPO this year.

Pong also cautioned that rich valuations will be hard to support without the help of foreign investors.

By Business Times