QUICKEY

Greetings. 

To those who might want to know more about the Share Investment Centre (Maybank Investment), please visit http://www.maybank2u.com.my

What interest me is the HOT Broking Programme introduced by Maybank Investment for newbie (bumiputera especially) but potential investors to be part of the retail market by investing into selected syariah counters.

But before investors decide to invest, they must first get the Yellow Form or Acknowledgement of Receipt from Ministry of Trade and Industry (MITI) and definitely there are rules to be followed for both category - individual or company (in most cases Private Limited - Sdn. Bhd.)

I do 'hear' few proposals as well but I do not know how true they are : 

a) To open up eligibility of Bumiputera to invest also for enterprise/partnership entities as well. (I notice in one IPO notice from Maybank Investment indicating 'enterprise entities' are eligible but MITI; I think clearly mentioned that it is for "Sdn. Bhd." )

If this is true (that enterprise/sole prop can apply for Bumi shares) then it is a good thing to do but there may be additional requirements to ensure that 'enterprise' (sole prop) entities have audited accounts (which is the same in the partnership - pursuant to Partnership act - but any act never mention a sole prop should also have audited accounts. The problem is because some of their clients require the supplier to have audited accounts but the supplier is only an enterprise entity which by law do not require audited accounts - perhaps an income statement )

b) Liberalization of retail market (syariah counters) branching out to Singapore, Brunei and Indonesia.

Alas, this is only my personal opinion - nothing to do with ROS/SSM, Maybank or MITI. Please contact the right authorities for further information.

FACEBOOK - NOT A DISASTER, JUST A TALE OF OLD FASHIONED GREED

Globalist Analysis > Global Markets
Facebook — Not a Disaster, Just a Tale of Old-Fashioned Greed  

By Beat J. Guldimann | Friday, May 25, 2012

A week ago, Facebook became a publicly traded company on the NASDAQ stock exchange — putting a valuation of $17 billion on its founder's ownership stake. Since then, Facebook's stock price has been sinking, leading Beat Guldimann to question why it was ever so high in the first place. Could old-fashioned greed have been a factor?

Photo credit: Lev Radin/Shutterstock.com

Mark Zuckerberg has finally done it. Facebook went public in an initial public offering (IPO) that valued the company at over one hundred times earnings at an initial offering price that was hiked in the last hours of the deal going live. This allowed Zuckerberg and other key shareholders of Facebook Inc. to squeeze a few more dollars out of an eager public thirsty for new issues in a dry market.

_________________________________________________

  Companies don't go public in order to make those

who buy their stock rich. IPOs happen for a lot of

reasons, none of which are altruistic.

_________________________________________________

Only a few days after the stock traded for the first time, the party seems to be over. Instead of rising and allowing some lucky speculators to make a quick buck, Facebook lost a quarter of its value.

Everybody is up in arms. There are the scandalized who are crying fraud and the told-you-so's basking in schadenfreude. Meanwhile, the media is labeling the Facebook IPO an epic failure — even a disaster.

Nobody can deny that the Facebook IPO is a bit of a failure. The stock was supposed to soar in the first few days of trading so that a lot of early investors could get paid for taking the risk. At least, that's what the investment bankers' playbook says.

However, the 25% pullback out of the gates is no disaster. To the contrary, it demonstrates that markets will see things for what they are. In the case of Facebook, markets were quick to recognize that the company was simply too expensive. And they did what markets are supposed to do — correct inefficient pricing.

The story of Facebook going to town is a tale of greed, nothing more and nothing less. Companies don't go public with the objective of making those who buy their stock rich. IPOs happen for all sorts of reasons, none of which are altruistic. Let's look at a few:

First off, there is Mark Zuckerberg, Facebook's founder and its controlling force. Ever since he took Facebook outside of Harvard, his story has been an amazing success. He became one of the wealthiest twenty-somethings on the planet by transforming the way people use social media.

His problem, however, was that the lion's share of the billions he created in personal wealth was tied up in the company. Zuckerberg's motivation for the IPO was to create liquidity and take some money off the table. Selling shares to the public gives him a lot of cash and allows him to reduce the concentration of investment risk associated with his brainchild.

_________________________________________________

shareholders are watching the value of their

investment drop, while Zuckerberg counts his coins

like Scrooge.

_________________________________________________

There is nothing wrong with this motivation per se. The problem is in setting the issuing price at an unreasonably high level, which hurt the buying public that paid Zuckerberg too much for his stock. Shareholders are watching the value of their investment drop, while Zuckerberg counts his coins like Scrooge.

Yes, we understand that Zuckerberg is still a shareholder in Facebook. As such, he too suffers from the decline in market value. The difference, however, is that he did not have to pay an arbitrarily high price for being part of the ride. Even if Facebook were to lose half its value, he would still be ahead.

Landing the elusive blockbuster deal

Second, we need to look at the investment banks. Morgan Stanley, Goldman Sachs and JPMorgan Chase led the syndicate that allowed Zuckerberg to transform his privately-held company into liquid money.

Their motivation was simple. Contrary to what Goldman CEO Lloyd Blankfein famously said in November 2009, investment banks are not doing God's work. They exist to create profits for their firms and opportunities for their bankers to earn a living and get paid bonuses.

Adding value to the economy or making future Facebook shareholders happy did not drive the Facebook syndicate. The main driving force for them was to land the elusive blockbuster deal in a dried-up new issues environment and bring in millions in fees that could be generously shared with a few lucky investment bankers in the form of outsized bonuses. It really is that simple.

Again, there would be nothing intrinsically wrong with any of this, had the syndicate not enabled the IPO to be priced at an unsustainable level. Arguably, if the investment bankers had done their job properly, they would have recognized that the issuing price was beyond reason and advised Facebook to go public at a more modest valuation.

They should also have disclosed their earnings warnings in a much more timely manner, possibly delaying the IPO altogether, as they realized that their assumptions were not supported by the reality of Facebook's latest numbers and forecasts.

_________________________________________________

Whether or not IPOs enable future growth of the

company now owned by the public is,

for the most part, just a side benefit.

_________________________________________________

The problem is that doing so would likely have meant lower revenues for the banks, or at least delayed gratification for those working on the deal. But moderation is not an area in which Wall Street bankers traditionally show too much strength. After all, Tom Wolfe refers to them as self-declared "masters of the universe" in his 1987 novel The Bonfire of the Vanities.

And let's not forget the brokerage community. Investment advisors (or should we just call them stockbrokers?) have been waiting for a deal like this one for a long time. They always have a number of key clients that are hungry for an IPO in the hopes of doubling their money quickly.

The benefit for the brokers lies in the elevated commissions that are typically associated with initial offerings. Is it any wonder then that they try to sell Facebook to their clients even at an unreasonable price?

What this short analysis leaves us with is the realization that IPOs such as the one we have just witnessed here have one driver. They satisfy the greed of company owners, investment bankers and stockbrokers first and foremost. Whether or not they enable future growth of the company now owned by the public is, for the most part, just a side benefit.

The single most important thing that the investing public needs to recognize in all deals like this one is that their interests and expectations are not usually aligned with the interests of those involved in bringing the stock to market and selling the IPO. Which really just brings us back to the tried and tested principle of "buyers beware."

Nik Zafri says :

I like the following article...very honest and very transparent analysis...

Although the article may be the thing of the past (so it seems) but I wish all bankers, investors, newly listed companies, speculators and analysts, economists etc. etc. to read the following article...

Be alert for some strong words but back up with solid facts.

We may take certain reminders so that we shouldn't be over excited of the current market performance but in fact, start working harder to continually improve them (stop sitting in the comfortable zone (not yet)

Also my reminder to all, stop playing the old record by saying that the high quantity of listing/IPOs indicates that the economy is going to be fine...it's the quality that we're talking here NOT quantity.

I think 'designation' of certain stocks by authorities should come in handy - perhaps the right time....but designating stocks should be packaged with clear regulations

Recession-struck Asia to face IPO shortage in 2009

Depressed equity prices, a spreading global recession and increasing risk-aversion among investors are likely to kill the motivation for Asia Pacific companies to be audacious enough to launch IPOs in 2009. The IPO pipeline, which had dried towards the end of 2008, will probably completely shut in the first half of 2009 and the most optimistic are now only hoping that stability will return to stock prices and that a few listings will follow in the second half of the year.

There have been several jumbo IPOs in the Asia Pacific over the past few years through to the first half of 2008. The drivers of this supply were Indian and Chinese companies taking advantage of continued economic growth and investor enthusiasm for exposure in the rising fortunes of the developing world.

This gung-ho mentality was sadly short-lived as these companies’ post-listing performances were disastrous, inflation touched new highs with the advent of recession and the financial sector collapsed under the weight of sub-prime problems.

The pain was particularly felt in the second half of 2008 and IPOs were postponed or completely culled as stock prices and indices plummeted and the probability of raising new money through issuing shares at reasonable valuations completely bit the dust.

A continuation of this surrender to the gloom in global markets is likely to ensure that companies keen on deleveraging will focus on raising equity via secondary placements or private stake sales rather than venture out with IPOs, said bankers.

The outlook for IPOs at least for the first half of 2009 is bleak,” said Simon Cox, head of syndicate at UBS Australia. “Most investors who have cash see enough opportunities in secondary markets every day and are not willing to be tempted to take risk in unknown companies by participating in an IPO unless they are priced very attractively. As a result, companies hardly have any motive to sell into this kind of environment which will kill supply in 2009.”

Signs of a prolonged slowdown in IPO activity are already evident. The Chinese IPO market, the region’s busiest for several years, had a slow start in 2009. The China Securities Regulatory Commission (CSRC) has still kept the domestic A-share market shut and only two tiny companies have listed on the Hong Kong Stock Exchange – the HK$250m (US$32.2m) IPO of mainland oil, petroleum and petrochemical trader Strong Petrochemical and the HK$63m float of China Singyes Solar Technologies.

There is one deal, though, that holds the hopes of all the companies looking to raise new equity. Chinese gold miner Real Gold Mining is braving the market with a US$150m deal and, though the defensive nature of gold could spur some demand, not many are willing to bet on the deal’s success.

Even if it is a success, bankers expect the Chinese IPO market to remain quiet in the first half and to show signs of recovery at best in the second half because of uncertainty about the direction of the global economy. “By that time (mid-year), people should be able to get a more solid view on the global economy and the mere hope of recovery could push up the stock markets and invigorate the IPO market,” said a banker.

When that happens, the infrastructure sector and companies in the retail business segment could be favoured as likely anti-recessionary candidates. “Investors remain picky and they would be only willing to put their money in India or China’s infrastructure and retail which are still considered growth sectors given possibilities demands of their huge populations will continue,” said another banker.

The Chinese government is set to invest Rmb4trn (US$584.4bn) in the country’s infrastructure sector in the next few years and is determined to maintain an 8% GDP growth by supporting domestic demand. India has similar plans to augment its infrastructure and support GDP growth.

The deals that may hit the market, however, would be modestly sized and the super jumbos are likely to be few and far between.

The only known candidate for a jumbo IPO is Agricultural Bank of China, which has plans for a US$20bn–$30bn A/H IPO in 2010. In October last year, Agricultural Bank of China received a US$19bn cash injection from the Chinese government to remove bad debts from its balance sheet and strengthen its capital base before going public. The bank transformed itself into a shareholding company in mid-January and is said to be looking at a Hong Kong and Shanghai IPO.

The Indian market is expected to remain somnolent during the first half as India gears up for its 2009 general elections. The elections are expected in May 2009. Prior to that, the Indian government is unlikely to push forward with any of its privatisations.

What little activity there is now is focused on CB buybacks with Reliance Communications and Jubilant Organosys among those quietly buying back CBs.

“In the Indian context, the market is bound to be turbulent pre-elections. It’s going to be difficult to do any deals. Post elections around June or July, hopefully, the markets will stabilise a bit and we could start seeing companies desperate to raise cash tapping the market in the fourth quarter,” said one Indian ECM banker.

And that is likely to be the trend in the rest of the region. Within South-East Asia, ECM activity will be driven primarily by recapitalisations, particularly within the FIG and real estate sectors, largely through rights issues. South-East Asian issuers tend to be family or major shareholder dominated, and rights issues backed by promoters will continue to be the prevailing trend.

“We are waiting for more rights issues out of Singapore. People are looking at issuers like CapitaLand, CapitaCommercial Trust and CapitaMall Trust to tap the market and we expect more fundraising within the REIT space. Our visibility for IPOs in SEA is minimal, so I definitely think it will be secondary fund raising and recapitalisations,” said another banker.

Although the past few months have been desolate for ECM bankers, there could be a pick-up in equity issuance towards the second half of 2009 as issuers find themselves faced with no funding alternatives.

“The IPO market is dead…The rescue rights or rescue placements in Europe will probably follow through to Asia, but Asian issuers have to swallow their pride first and take the decision to issue equity. If debt markets remain closed, they will have no choice, at some point the penny will drop,” said one Hong Kong-based Southeast Asian banker.

In Korea, the healthy IPO pipeline has imploded with first life insurers and then construction firms falling off the map. A market plunge, where the Kospi drifted below 1,000 for the first time in three years, and a subsequent liquidity squeeze has set a bleak tone for 2009 and bankers are struggling to find candidates to come to the market.

If markets were to improve, bankers think it will be the life insurers that will return first with Tongyang Life Insurance regarded as the most likely candidate. Tongyang Life came close to listing last summer but was forced to pull the deal at the last moment and has since renewed its listing filing twice with the latest deadline extended to August.

Bankers are not confident that Tongyang Life can meet that timetable but they suggested that if the deal could get done this year then other life insurers like Kumho Life and Mirae Asset Life would follow.

Also on bankers’ radars are a string of deals from Hyundai-related companies with Hyundai Motor rumoured to be considering spinning off Hyundai Card and Hyundai Capital while Hyundai Group considers a listing of Hyundai Logistics and Hyundai Home Shopping.

Bankers said that although the Hyundai deals inflated their pipeline, the execution of such deals would depend on whether the Hyundai Group was willing to use its cash piles to support the businesses and avoid a listing.

“The problem with a lot of the listing candidates is that they are backed by Korea’s industry giants and conglomerates. There is no real urgency to get these firms to the market,” one banker noted.

That argument can probably be best applied to the listing plans of Korea’s construction firms, including Posco Engineering and Construction and Lotte Engineering and Construction and Hyundai Engineering and Construction, which were all expected to list in 2008/2009 but have recently reversed those plans. Bankers blamed the cancellation of their listing plans on a strategic decision to lean more heavily on their chaebol relationships than the public markets.

And in Australia it will be difficult to see any IPOs being done in 2009, especially after the few that got done in 2008 were disastrous for investors. BrisConnections which did a huge IPO in 2008 saw its partially paid A$1 shares falling to a record low of A$0.001 post-listing. IvanHoe Mines also did one that was the year’s second largest IPO but are trading way below their issue price.

Against that background, reviving investor confidence for IPOs will be difficult.

“There could be opportunities of IPOs by diversified companies demerging to realise value in specific units or even venture capital/private equity selling off stakes but those deals in this depressed environment will have to be priced relatively cheap. . .we are not recommending our clients to go ahead and do IPOs in this environment,” said one banker.

Shankar Ramakrishnan, Fiona Lau, Denise Wee, Govinda Finn