Singapore has fallen behind Vietnam in initial public offerings (IPO) for the year, despite the nominally communist state still being considered a frontier market by significant index providers.
Its status is less established and riskier than emerging markets while the Lion City is seen as a developed market.
The totals funds raised on the Singapore exchange this year fell by 84 per cent to US$531 million, due mainly to US-China “trade war” and rising interest rates.
Singapore’s open economy means it is more affected by the global downturn that has persuaded companies to delay listing plans in 2018.
The IPO amount for last year was US$3.4 billion raised from 20 IPOs, including seven mainboard listings and 13 Catalyst board listings, which was the second lowest level since 2008.
Globally, although the number of deals fell, the proceeds raised rose to US$160.6 billion from US$141.4 billion generated from January to September.
But this can be explained by the robust IPO activity in the Americas and Hong Kong.
“In the second half of 2018, global trade wars, political tensions and volatile markets have inadvertently impacted economic sentiments, causing delays in the listing timeline of some IPO aspirants,” Tay Hwee Ling of Deloitte told the media.
There has been a global fall in IPO activity as employers held back expansion plans in an uncertain climate.
Singapore finished the year with 13 deals that raised around US$500 million, behind Vietnam, Thailand and Indonesia, the consultancy EY reported.
Thailand’s busy IPO market recorded 21 listings by December 15, raising US$2.4 billion, which was largely attributed to two listings in October: Osotspa, a Thai food and beverage empire, which raised US$400 million, and Thailand Future Fund, an infrastructure trust which raised US$1.3 billion amid heavy infrastructural investment by the military-controlled authorities.
Large Vietnamese IPO deals came about after the authorities in Hanoi began a long-awaited privatisation drive. The US$1.35 billion IPO by real-estate firm Vinhomes was the biggest ever in the country and Asean’s second-largest of 2018.
And more Vietnamese selloffs are expected.
Singapore has been the centre of Asean’s capital fundraising for decades but events like the penny stock crash in 2013 undermined investor confidence, causing a slump in trading volume and the IPO pipeline.
“Depending on the stability of the global economy, we can expect the IPOs [in Singapore] that have been delayed in 2018 to seek a listing in the first quarter of 2019,” Tay added.
“Communist” Vietnam is privatising. Picture credit: Wikimedia