Introduction

There are 2 types of benchmarks used for evaluating the qualification of a company to be listed on the stock market. They are regulatory benchmark and market benchmark. Regulatory benchmark has been explained in the previous blog post – MQ Trader – The requirement for listing IPO (Part 1). In this article, we will be discussing on market benchmark for listing IPO.

Market Benchmark

The market benchmark for listing has no prescribed set of rules. It is purely driven by market expectations, which are basically the perceived value of a company based on the prospect of the company. In turn, these prospects are premised on the attributes that are important to investors.

These attributes include:

• The track record of promoters, directors and management of your company
• A company’s stage of development vs its industry’s business cycle.
• Your company’s financial performance when compared to other companies of similar business and operations
• Your company’s position in the industry vs competitors

Generally, these attributes are the main factors that investors take into consideration before investing in a company. Market benchmark is also able to identify whether a company will be attractive to investors if it is listed on Bursa Malaysia.

Conclusion

Meeting the regulatory benchmark alone may not be sufficient to attract an Investment Bank to act as an advisor for a company. By using market benchmark approach, advisors have the responsibility to filter good quality companies that fulfill the market benchmark and able to be accepted by investors to be listed in the market.

MQ Trader Workshop

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For those who are interested, you can visit MQ Trader Workshop - Budget 2019 Outlook & Backtesting With MQ Trader [Free Registration!] to know more about our coming workshop on 14 November 2018. 

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Disclaimer

This article does not represent a BUY or SELL recommendation on the stock covered. Traders and Investors are encouraged to do their own analysis on stocks instead of blindly following any Trading calls raised by various parties in the Internet. We may or may not hold position in the stock covered, or initiate new position in the stock within the next 7 days.

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