KUALA LUMPUR: With transactions in Maxis Bhd shares accounting for almost half of the total transaction value for the entire market last Thursday and Friday, brokerage houses, remisiers as well as Bursa Malaysia — who were all intermediaries as Maxis shares changed hands — are likely among the week’s biggest winners.

The 305.8 million Maxis shares that changed hands on its maiden trading day (Nov 19) were worth RM1.58 billion, 57.7% of the day’s tally, boosting total transaction value for the entire market by 2.4 times day-on-day to a whopping RM2.74 billion. In fact, the value of Maxis shares done alone was 1.4 times the RM1.12 billion done for the whole market (on Nov 18) prior to its relisting.

In other words, stock-broking houses, remisiers as well as the stock exchange who had a hand in the dealing of Maxis shares potentially earned at least twice as much fees and commissions as retail investors took profit while others bought more from the open market. There were also inter-brokerage commissions for local houses who dealt on behalf of foreign clients.

Back-of-the-envelope calculations show that transaction fees for the RM1.58 billion worth of Maxis shares done on its maiden day alone could come up to some RM15.8 million, if one were to use a 1% rate as a gauge. (Brokerage fees for institutions, capped at 0.7% of contract value, are fully negotiable.

Retail trades above RM100,000 are charged a minimum brokerage rate of 0.3% while contracts below RM100,000 carry a minimum brokerage rate of 0.6%.

There is also a 0.03% clearing fee, up to RM1,000 per contract, as well as stamp duty of between RM1 and RM200 per contract.)
If last Friday’s trades were included, transactions in Maxis shares were worth RM1.84 billion or 45.75% of the market’s RM4.02 billion total transaction value over the two days.

Even before the opening bell last Thursday, brokerages that dealt with the 212.3 million shares allocated to retail investors alone were already getting some RM10.1 million in brokerage fees from vendors of Maxis shares, being 1% of the final retail IPO price of RM4.75 apiece, according to Maxis’ listing prospectus. And the amount of shares allocated to retail investors was only 2.83% of Maxis’ total share base, while various institutions took the remaining 27.17% block offered for sale.

Placement fees and commissions paid for the institutional tranche are estimated to be at least RM230 million, at the rate of 2.25% of the RM5 final institution price. Commissions could go as high as 3%, including a 0.5% discretionary fee.

While initial public offerings (IPOs) often boost total market volume on debut, the one-time boost in terms of what total market transactions are worth are seen only when the debutant commands a big market capitalisation.

As expected, Maxis topped the most-active list on debut, with the 305.8 million shares done making up 22.1% of the day’s total market volume of 1.39 billion units. However, the local bourse had seen much more volume just two days earlier (Nov 17), thanks to interest on lower liners. Maxis continued to be actively traded on its second day, with some 50.17 million shares worth RM258.88 million changing hands, making up 20.19% of the RM1.28 billion total transaction value for the entire market last Friday.

At Friday’s RM5.37 close, Maxis’ sheer market capitalisation of RM40.28 billion earned it fourth placing after Sime Darby Bhd, Malayan Banking Bhd and CIMB Group Holdings Bhd, and just ahead of Public Bank Bhd and Tenaga Nasional Bhd.

However, its free float-adjusted (30% investability ratio) puts Maxis in 10th place on the FBM KLCI with a 3.05% weighting, according to Bloomberg data. In terms of weighting, Maxis ranks after CIMB (11.75% weighting on the index), Sime Darby (10.17%), Public Bank (9.8%), Maybank (9.32%), Tenaga (6.91%), IOI Corp Bhd (6.57%), Axiata Group Bhd (5.04%), Genting Bhd (4.98%) and MISC Bhd (3.31%).

Nonetheless, Maxis’ weighting comes ahead of Telekom Malaysia Bhd’s 2.05% (No 15) and DiGi.Com Bhd’s 1.71% (No 17). A higher weighting would make a counter more attractive to investors who are benchmarking against a particular index.

With most Maxis shares changing hands around RM5.40 apiece in its first two days of trading, retail investors who took profit on their IPO allocations would have pocketed a 13.7% capital gain — still decent despite being below the 18% retailers saw with the “old Maxis” in July 2002.

In retrospect, the “old Maxis” was sold to retail investors at RM4.36 apiece, debut at RM4.94 and traded between RM4.86 and RM5.30 on its maiden trading day before closing at RM5.15 on July 8, 2002. This represented a 79 sen or 18.1% gain over the retail IPO price.

Based on its first two days of trade last week, Maxis shares were highest at RM5.50, a level it touched within the first minute of trade but failed to sustain. Last Friday, Maxis eased five sen or 0.92% to close at RM5.37 after ending its maiden trading day 42 sen or 8.4% higher at RM5.42 on Thursday.

This article appeared in The Edge Financial Daily, November 23, 2009.