PETALING JAYA: Mega initial public offerings (IPOs) by companies such as SpaceX, OpenAI and Anthropic are unlikely to spark an exodus of fund flows from Malaysia as foreign ownership of local equities is already near historic lows and domestic institutions continue to provide captive buying support and demand for domestic initial public offerings (IPOs).
One local seasoned investment banker said any capital reallocation into the blockbuster US listings would likely come from larger markets such as Europe, China and Japan rather than emerging markets like Malaysia and Asean, given the latter’s relatively small weighting in global investment portfolios.
“Moreover, the companies coming to market operate in sectors that are largely absent from Malaysia and even much of Asia.
“If the listings were in industries where Malaysia is big in, such as plantations, investors may have to decide between maintaining their local positions or allocating capital to the new IPOs.
“However, these upcoming US listings are in sectors in which the country is not a major player, reducing the likelihood of investors reallocating funds from local stocks,” he told StarBiz.
The investment banker added another consideration is how much of the IPO shares of the US listings actually get allocated to Malaysian investors “because that is how much they will be paying or subscribing for.
“For heavily oversubscribed deals, the allocations may be small and hence also would not result in much outflow,” he said.
SpaceX is targeting what could become the world’s largest-ever IPO, with reports indicating the Elon Musk-led space and satellite company aims to raise about US$75bil at a valuation of roughly US$1.75 trillion.
Meanwhile, Anthropic, the developer of Claude, has confidentially filed for a US listing and was recently valued at about US$965bil.
OpenAI, the creator of ChatGPT, is also reportedly preparing for a public debut later this year at a valuation of between US$852bil to US$1 trillion, setting the stage for one of the biggest waves of technology IPOs in market history.
The sheer size of the offerings has also sparked debate on Wall Street over whether investors can absorb a wave of mega listings within a short period.
While some analysts argue the depth of US capital markets should allow the deals to be digested without significant disruption, others have cautioned that simultaneous listings by SpaceX, OpenAI and Anthropic could stretch investor demand and intensify competition for capital.
Tradeview Capital fund manager Neoh Jia Man said the direct impact of capital outflows from the anticipated mega US IPOs is likely to be limited, if any, for Malaysia, noting that foreign shareholdings in the local equity market have already fallen to a record low of about 18.6% as at the end of last month.
“Investors seeking exposure to AI-related growth opportunities have likely already positioned themselves accordingly.
“As such, these mega IPOs are more likely to attract capital from technology-heavy markets such as South Korea, Taiwan and the United States, rather than trigger significant capital reallocation away from Malaysia,” he said.
Foreign investors have remained volatile in their positioning on Bursa Malaysia this year.
After recording net inflows of RM2.73bil in the first quarter of financial year 2026, foreign funds reversed course in May with net outflows of RM3.56bil, more than offsetting the RM449mil inflow seen in April.
As a result, foreign investors have been net sellers in recent weeks, extending a three-week selling streak as at end-May.
The anticipated US mega IPOs have also raised questions over whether they could affect upcoming Malaysian listings such as Big Caring Group, IOI real estate investment trust and AsiaOne Healthcare by diverting liquidity and dampening subscription demand or aftermarket performance.
However, Neoh said the success of Malaysian IPOs is likely to depend more on their valuations, business models and growth prospects than competition from blockbuster US listings.
He noted that domestic institutions, particularly government-linked company funds, continue to provide a sizeable pool of captive demand for local IPOs.
“As long as the valuation is right and the growth story is compelling, there should be sufficient demand for these offerings.
“There is not much relationship between capital flowing into US mega IPOs and the performance of Malaysian IPOs,” Neoh said.
Meanwhile, iFAST Capital research analyst Kevin Khaw Khai Sheng said there is a possibility that the mega US IPOs in the pipeline could draw some liquidity away from global markets and that, as an EM, Malaysia “may be affected to some extent”.
However, Khaw noted that Malaysia did not participate significantly in the recent technology rally and, therefore, the upcoming US listings are unlikely to materially drain liquidity from the local market.
Nevertheless, Khaw expects foreign fund outflows from Malaysia to persist as investors remain focused on technology-related opportunities.
“All eyes are on the technology sector at the moment and, unfortunately, Malaysia is not as attractive as some other markets.
“This is one of the reasons liquidity has been flowing out of the Malaysian market. At this juncture, I do not see any major catalyst capable of attracting foreign fund flows back to Malaysia,” he said.
To this end, the seasoned investment banker said the direction and fresh catalyst for the local bourse will likely hinge on the outcomes of the upcoming state elections in Johor and Negri Sembilan, which investors will be watching closely for signals on the country’s political direction.
“The outcomes of these elections will be closely watched by investors and could affect how the market reacts going forward, whether positively or negatively.
“Market volatility has been a fact of life for the last 12 to 18 months amid continued uncertainty surrounding US policies and global trade developments. So, it is not new.
“Markets have been able to overcome these risk events so far, and Malaysia has gone through similar periods of volatility before. It is difficult to say this is the end of our market for the year,” he said.
Elections are expected to be held within the next two months in both states after both state assemblies were dissolved last week.
The polls are expected to serve as an important gauge of public sentiment towards the ruling coalition and could provide investors with clues on the country’s political direction ahead of the next general election.
Alternatively, as for whether the mega US IPOs could provide a broader lift to equity markets by increasing buoyancy and attracting fresh capital into equities that will benefit the broader global equity market including Malaysia, Neoh said any positive impact would ultimately depend on how the listings perform after their debuts.
“If these mega IPOs do well, they could attract more capital into equities and support broader market sentiment.
“However, if they fail to meet expectations, that could become a concern for the broader global equity market as well,” he said.
Neoh added that technology-focused markets such as South Korea and Taiwan would likely see a greater positive sentiment impact from the success of those US mega IPOs, as these markets have a relatively stronger exposure to technology and artificial intelligence- or AI-related sectors.
However, Khaw was more cautious, arguing that the upcoming listings could instead increase market volatility given their lofty valuations and the amount of capital required to participate in them.
“At this juncture, the valuations being discussed are extremely high.
“Some investors may need to force sell existing holdings that have already generated substantial gains in order to participate in these IPOs.
“This could lead to a bumpy road ahead for equity markets.
“As a result, I see more risks than rewards in the near term,” he said.
Khaw attributed some of the recent weakness in semiconductor stocks to investors positioning themselves ahead of the anticipated mega US IPOs, as capital is reallocated towards high-profile technology opportunities.
He added the mega IPOs could also reignite concerns over an AI bubble as capital becomes increasingly concentrated in a handful of high-profile listings.
“As such, any correction of about 20% to 30% is healthy,” he said.
The banker said whether the upcoming mega IPOs ultimately support broader market sentiment will depend on how they perform after listing.
For instance, Tesla recorded years of losses and cash burn before eventually achieving profitability.
“There is a lot of euphoria surrounding SpaceX.
“The market is effectively betting that Elon Musk can replicate what he achieved with Tesla, where the company burnt cash for years before profitability eventually materialised,” he said.
He cautioned that while such optimism could support valuations in the near term, investors would eventually focus on earnings delivery and a clearer path to profitability.
“At some point, financial realities will matter.
“The question is how long investors are willing to wait for those results to come through,” he said.
Furthermore, any positive spillover from successful listings would likely be concentrated in the US market rather than on global equities more broadly, although strong performances could encourage other AI-related companies, like China’s Deepseek, to pursue public listings.
