The impact of global financial crisis on the performance of Malaysian listed property companies

Abstract

The listed property companies are one of the real estate vehicles in Malaysian investment sector besides REITs and direct property investment. Although listed property companies play an important role in shaping Malaysian economy, the research on performance of Malaysian listed property companies has been modest in recent years notably after 1997/1998 Asian Financial Crisis (AFC). The objectives of the study are to determine the impact of Global Financial Crisis (GFC) on listed property companies and to assess the factors contributing to performance. This study provides descriptive and risk-adjusted analysis on the performance of 60 Malaysian listed property companies and factors using Dynamic Panel Regression Analysis from January 1999 till December 2012 to understand the impact of pre, during and post GFC. The results show that most companies experienced downturn during GFC period. However, they recovered fast in post GFC by gaining better Sharpe ratio, improved return and lower risk compared to their performance in pre GFC period. The econometric analysis using total return as dependent variable with 7 independent factors; GFC, market value, cash flow, dividend, intangible asset, total debt, and book value per share. The results revealed that only market value, book value per share and GFC factor have significant results in the Dynamic Panel Regression estimation model. With these findings, investors must aware that AFC and GFC reacts differently towards performance, hence property companies are able to use financial variables as guidelines in presenting their performance in future.