KLSE Deputy President of Strategy and Development, Abdul Hamid Sh Mohamed said "the MESDAQ market, maintained as a unique market for high growth and technology based companies continues to expand opportunities for the investor, issuer and venture capitalists."
Abdul Hamid was speaking at the media conference on Investment Opportunities In The MESDAQ Market. The briefing consists of updates on the MESDAQ Market and a brief presentation by MESDAQ Listed Companies.
"Of the seven companies listed on the MESDAQ Market, on average, each company successfully raised RM9.5 million from the IPO process for capital requirements."
"Whilst for investors and venture capitalists, the MESDAQ market provides a strategic exit mechanism for them to liquidate investments and to re-invest," he said.
Interests in a number of companies on the MESDAQ Market are often held by venture capitalists like Multimedia Super Corridor Ventures, Malaysian Trade & Development Corporation and institutional investors, including Kumpulan Wang Simpanan Pekerja, Lembaga Tabung Haji and state foundations by way of private placements.
"The MESDAQ Market provides an important exit mechanism for these investors, to allow them to re-invest proceeds in other companies. The MESDAQ market therefore acts as an important conduit for the further development of the venture capital industry and for institutional investment," Abdul Hamid added.
On the performance of the MESDAQ Market Index, he said it remained positive, recording its highest level to date at 179.61 points on 1 April 2002, two weeks after the establishment of the MESDAQ market at KLSE. The MESDAQ market index recorded an improvement of 37% year to date, closing at 120.99 points on 17 June 2002 compared to 88.08 points on 31 December 2001.
Post merger trading averages for 2002 is very encouraging. Whilst daily average value of trade for 1999, 2000 and 2001 were only RM29,141, since the merger, this has increased to RM 1.92 million, showing an improvement of 6,500%.
"Whilst the figure is still small compared to the overall market (RM 732.53 million), it is an encouraging sign of improvement."
"We expect this to improve further as more companies are listed on the MESDAQ market," Abdul Hamid said.
Highest trading volume was 15.73 million shares recorded on 29 April 2002, with highest trading value recorded at RM9.7 million on 26 March 2002. Highest market capitalisation to date peaked at RM459 million on 29 April 2002. Investor interest continued to be sustained, if not enhanced with market capitalisation closing at RM394.12 million on 17 June 2002.
Counters on the MESDAQ market also continue to be actively traded, with investors registering interest in the securities of Willowgen, Disccomp, PUC and Palette.
Moving forward, Abdul Hamid said the outlook remains positive for the MESDAQ market.
Two new companies have applied for a MESDAQ listing, bringing the number of companies under various stages of approval to seven. Out of the five companies already approved for listing, YTL-E-Solutions and IRIS Technologies are two new IPOS market participants can look forward to. With a market capitalisation of RM148 million and RM250 million respectively, both issues will be the largest companies on the MESDAQ market, raising RM38 million and RM63 million respectively.
"The inclusion of these two large cap counters should significantly improve liquidity and is expected to double the market capitalisation of the MESDAQ Market," he said.
Abdul Hamid said the admission of these companies in the MESDAQ market will further endorse investor confidence and clear the misconception that the MESDAQ market is for small cap companies. Whilst the listing requirements state the minimum paid-up capital for companies seeking a MESDAQ listing is RM2 million, there is no ceiling to the market cap for interested issuers.
"Large or small, the MESDAQ market serves companies who seek to profile themselves strategically in the high growth or technology sector," he added.
Another misconception, according to Abdul Hamid is that the MESDAQ market is merely for technology companies.
"We have determined 12 priority areas, which include services, transportation, healthcare, aerospace and emerging technologies; and this list is not exhaustive."
"A company can also be admitted on MESDAQ market if it can demonstrate to the exchange its high growth potential. The priority areas are not meant to be exhaustive," Abdul Hamid said.
The effort in promoting the MESDAQ market is not just limited to investors and brokers. For the benefit of potential and current issuers, the exchange is continuously trying to increase its pool of advisers and sponsors. OSK Securities was admitted as an adviser in April, bringing the total number of MESDAQ advisers to seven.
"We are in the midst of signing final agreements with another two merchant bankers, while two others are in the process of filing for application. By year end, we can anticipate the MESDAQ market to have eleven merchant banks and universal brokers in our pool of registered advisers," he said.
In taking the MESDAQ market further, the exchange is actively and continuously looking at ways to expand, enhance and develop the market. Its sponsorship of Venture 2002, the business plan competition is another initiative to stimulate entrepreneurship and development of new businesses. MESDAQ will also expand the Malaysian Enterprise Network initiative to further support the venture initiative and stimulate growth of the venture capital industry.
"We continue to seek collaboration with internal or external parties on actions, which can further develop the market. MESDAQ is not a static market. It will evolve with the needs of market participants and global trends," Abdul Hamid added at the briefing.
The briefing is the fourth organised by the MESDAQ Market. The first two was held in Johor Bharu and Melaka last month and the third in Kuala Lumpur last week. "We will have one final briefing for dealers in the Klang Valley in Petaling Jaya next week and next month we will meet with dealers in Ipoh and Penang. If the issuers are interested, we will extend the effort to Sabah and Sarawak", said Abdul Hamid Sh Mohamed. "We hope this effort will promote informed investing and in the long term, boost liquidity in the secondary market," he added.
