Back in the 70s when I used to follow my mum to Thong & Oh Securities on Bishop Street in Penang, the share market was dominated by aunties and uncles hoping to make a fast buck on the stock market.
Rumors flew, how they flew. So-and-so whispers, ‘buy this company’. So-and-so utters, ‘buy that company’. And off to the telephone folks rushed to call their remisier.
That was how stock selection went in those days. All anyone wanted to know was what company’s shares to buy. Ditto which 4D number to punt on. Or which horse to buy for Sunday races.
Malaysians, they love their flutters. But that was then, you might say. You might think a lot has changed in 50 years. That folks have matured and are more discerning in their asset allocation.
Unfortunately, No. Not much has changed.
The majority of retailers still, to this day, know the business of the stocks they buy. Rarer even, regular monitoring of company earnings.
And the same can also be said of the new companies debuting on what seems like a weekly basis.
Last year, we welcomed some 60 new companies to Bursa Malaysia. This year, we’ll probably do the same if not more. There’s a good chance that some will go on to become multi-billion ringgit companies while others, well, they might fade away.
Sifting through the winners and losers is an arduous task. But that’s what separates the multimillionaire investors from those who constantly lose money on the market.
If you had bought Inari Amertron in its 2011 IPO, you would have multiplied your money by 25x.
If you had done the same for ViTrox Corporation in 2006, you would have enjoyed a 155x gain.
Bursa Malaysia is full of stories like these. And it all begins with the prospectus. A document so think and heavy you could clobber a man unconscious with it.
But if you chose instead to read it cover to cover, some of these returns could be in the offing.
It’s a document that take some two years to produce. The sum total of a number of advisors who work on it 18 hours a day, poring over every detail to make sure the company going for listing is shipshape and worthy of your previous savings.
If anything has changed in the past 50 years, it is the quality of disclosure and information that goes into company prospectuses so that investors make the best decision possible.
It is this with this mission in mind that Stephanie Ng and I decided to do a deep-dive of the IPO process as a reference point, so that students, founders, capital market players and minority investors alike can appreciate the sheer volume of work and detail that go into the process.
Many thanks to Ong Eu Jin and Gary Ting for your precious time with us recording the first of several podcasts on this corner of the capital markets as lawyers and principal advisors in the IPO process.
As Ben Franklin once said, “An investment in knowledge pays the best interest.”
Carpe Diem.
Happy Sundays all.
