Opportunities After the Fed’s September Rate Cut - Malaysia’s IPO Scene

The United States Federal Reserve delivered its first interest rate cut of the year on 17 September, trimming the federal funds rate by 25 basis points to a range of 4.00 to 4.25 percent. Chair Jerome Powell framed the move as a form of risk management, aiming to balance a slowing labour market with inflation that has yet to fully return to target. The decision was not unanimous, with Governor Stephen Miran preferring a larger half-point cut, highlighting divisions within the committee about how aggressively to ease policy.

Regional Market Reactions and Local Financial Flows

In Malaysia, recent developments indicate improving sentiment. Foreign investors have turned net buyers on Bursa Malaysia, breaking a prolonged period of foreign equity outflow. Over the past two weeks ending 22 September, foreign investors registered net inflows of about RM492 million. Local institutions, conversely, have been net sellers over the same period. Retail investors are also shifting, though their outflow is relatively small.

This marks a notable change, as the market had seen foreign outflows for much of the year. The renewed foreign buying suggests that global rate trends, including the Fed’s cut, are helping to restore risk appetite, which is crucial for equity markets. Although Malaysia’s own interest rates are lower (Bank Negara Malaysia cut the Overnight Policy Rate to 2.75% earlier in 2025), the differential with US yields has been narrowing, which makes Malaysian assets more attractive.

What’s Happening with IPOs Locally

Recent IPOs in Malaysia (especially on the ACE Market) are showing strong oversubscription rates, underlining renewed investor interest. Two especially notable IPOs:

• JS Solar Holdings Bhd (ACE Market, listing 23 September): The IPO was oversubscribed by 32 times overall. The Bumiputera portion saw 46.42× oversubscription, non-Bumiputera portion was 50.23×.
• Express Powerr Solutions (M) Bhd (ACE Market, listed 24 September): IPO raised RM49.08 million at 20 sen per share and was oversubscribed by 13.55 times. On debut, its shares rose ~12.5% to close at 22.5 sen (vs IPO 20 sen). It emerged as the most active counter of the day, with 170.97 million shares traded. The Selangor based generator rental firm has a dividend policy of distributing 30%–50% of annual profit and counts Tenaga Nasional Bhd (TNB) among its key clients.
• Camaroe Bhd (ACE Market, listing planned for 2 October): Public portion oversubscribed by 26 times, Bumiputera portion ~6.83×, non-Bumiputera ~23.69×. Shares allocated to eligible persons, Bumiputera via MITI, and via private placement were all fully subscribed.

These oversubscriptions show investors are willing to commit capital to new offerings, especially in sectors with clear growth narratives (renewables for JS Solar, aquaculture/ seafood exports for Camaroe, and power solutions for Express Powerr). The inclusion of Express Powerr also highlights investor appetite for essential infrastructure plays, as its generator rental business supports industries ranging from utilities to large-scale events, with key clients such as Tenaga Nasional Bhd (TNB). Moreover, excess demand from both Bumiputera and non-Bumiputera tranches suggests broad interest across investor segments.

Linking the Dots: Rate Cuts, Sentiment, and IPOs

Several factors are converging to create opportunity in IPOs now:

1. Improved Foreign Sentiment: The shift from foreign outflows to two weeks of net inflows suggests international investors are more willing to return. This helps boost liquidity and gives IPOs a stronger backstop.
2. Macro Backdrop More Supportive: With global interest rates expected to ease (after the Fed cut) and Malaysia’s own ringgit strengthening and relatively low policy rate, the financing cost environment is more favourable. Also, policy clarity, stability, and structural growth (e.g. energy transition, sustainable industries) improve confidence.
3. Investor Appetite for New Issues: Oversubscription rates on recent IPOs indicate that demand is strong. Investors are signalling that they are willing to step into IPOs, not just secondary market trading.
4. Valuation & Upside Potential: Some of these IPOs are priced with what many consider being attractive fair value compared to expected growth; for example with JS Solar many analysts see upside from its issue price given its order book, clean energy positioning and policy tailwinds.

Implications for Malaysia

While the Fed’s rate cut has global implications, in Malaysia the key trigger has been foreign capital returning, which helps support both equity valuations and IPO uptake. The oversubscription data from JS Solar and Camaroe show that sections of the market are hungry for new listings. The ACE Market in particular is becoming a focal point.

Given Malaysia’s broader market fundamentals (resilient GDP growth, low inflation, improving investment pipeline), IPOs seem positioned to be one of the stronger plays for risk assets locally in near term. For many traders, IPO allocation and participation may offer better reward risk than buying into overextended secondary stocks, especially until foreign flows are more sustainable.

Looking Ahead

For investors, the Fed’s latest move reinforces a supportive backdrop but success still comes down to being selective, balancing risks, and acting on the right opportunities. Whether it’s capitalising on IPO momentum, the key is having the right platform to access the market with ease.

Rakuten Trade makes that possible. Open a fully digital account in minutes and enjoy low brokerage on Bursa Malaysia and US markets, trade fractional US shares, Raku-Invest and earn RT Points as you invest, and benefit from our research insights and webinars tailored for Malaysian investors.

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