Broken glasses everywhere

So Perwaja was finally listed today. It was touted as the listing of the year based on its sheer size (market capitalisation of RM1.6b) and on its "from rags to riches" story. The opening and closing for the stock was very disappointing to many investors who have gone through the IPO selection process in which they have to pay RM2.90 per share. The shareholders via Kinsteel also stand to lose although not as much as the IPO subscribers. The disappointment came with the fact that the share has been recommended a BUY by research analysts who gave the fair value price of the stock from RM3.70 to RM4.90. Could the 1st day blues of Perwaja linked to the expected further softening of steel prices and lower demand in the future and also the current weak market sentiment all together or are there something else? Are all the analysts which have MBAs and CFAs under their belts got the figures all messed up? I believe the disappointing price is due to a combination of all the above factors and more particularly due to the current weak market sentiment...mind you our market has gone down more than 25% this year. I have attached above a summary of companies listed this year to date and below are some findings why I draw from this conclusion.

Listing day-

* Of the 14 companies listed, more than half of the companies closed on the first day below IPO level.

* Of the 6 main board companies listed, 4 companies closed on the first day below IPO level.

* Of the 4 2nd board companies listed, only 1 company closed on the first day below IPO level

* Of the 4 Mesdaq companies listed, 3 companies closed on the first day below IPO level.

Conclusion

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If really want to subscribe for IPO, go for 2nd Board companies. Making money from IPO in general on the first day of listing = 42% chance only. No more 100% success stories!

Post Listing-

* Of the 4 2nd board companies listed, 2 of them are doing better than the IPO price now while 2 others are not.

* Of 4 Mesdaq board companies listed, 1 is doing better than the IPO price now while 4 others are not.

* Of 5 Main board companies listed, none is doing better than IPO price now.

(Excluded Perwaja because we do not have its post listing data)

* Todate, for the main board companies, the price compared to IPO price is down from 16 to 35%.

Conclusion

Based on the above and looking at the current market sentiment, I would say there is no point subscribing for IPO shares now as we can buy them cheaper on post listing days. If you REALLY REALLY need to subscribe IPO shares, 2nd board companies stand a better chance of making money. However, it is better to sell off the shares during listing day or a few days closed to listing day as only 3 out of 13 companies managed to do better than the IPO price post listing. But....it is always good to do our own homework on the companies we intend to invest and the sectors they are in as good companies could be sold down irrationally by panic sellers. Stick to our own valuation and conviction.

* Bloomberg: Richmond Fed Reserve President publicly clash with Paulson on Fannie and Freddie calling both companies to be privatised rather than backed by Government but owned by shareholders. He proposed both companies to be nationalised, then split up and sold off.

* BT: Jim Rogers will be in KL on August 23 but his talk is only exclusive for CITI Gold customers!

* BT: P1 finally launches its WiMax applications yesterday. Unfortunately, the coverage areas are still very limited and I really hate the "bulky" looking modem. Suggest to wait for newer versions and better coverage first.

* South Korea's regulators are making new listing easier while making delisting harder for troubled companies. Times are bad!

* Hanoi and HCM's stock market trading ranges have been widened. HCM +/-5% (from 3%) and Hanoi +/-7% (from4%)

* Datuk Lee Chong Wei- RM300k and RM3k monthly pension...coming in too young and too early????? Will this player loose his drive and hunger???

* FinancialTimes: Indonesia is pushing to develop a larger Islamic market. It has recently appointed HSBC, Standard Chartered and Barclays Capital to handle its global Islamic Bond program to boost the sukuk market. Malaysia is the world's leading sukuk market issuing about half of the USD51.5b issued last year.