SINGAPORE (Nov 26): Capital markets across Southeast Asia remained buoyant in 2019, despite ongoing global geopolitical tensions and macroeconomic events such as the US-China trade conflict and potential outcomes of Brexit.
According to data from Deloitte Singapore, Southeast Asia bourses so far this year to mid-November have raised some US$6.8 billion ($9.3 billion) through 138 initial public offerings (IPOs). The region also generated some US$21.6 billion in market capitalisation.
This, however, paled in comparison to the full-year count of 152 IPOs for the whole of 2018, which raised US$9.5 billion and US$46.1 billion in market capitalisation.
Speaking to the media on Tuesday, Tay Hwee Ling, Deloitte’s Disruptive Events Assurance Leader for Southeast Asia and Singapore, notes that the current year’s figures were spearheaded by Thailand and Singapore – which accounted for 39% and 33% of the total funds raised respectively.
Tay highlighted how Thailand had overtaken Vietnam as the biggest market for IPOs in Southeast Asia.
"The performance of Thailand’s IPO market in 2019 is largely driven by home grown companies and both foreign and domestic investor liquidity is high, which continues to generate strong appeal for investors and fund managers,” says Wilasinee Krishnamra, leader of the Disruptive Events Assurance team at Deloitte Thailand.
“We are seeing a strong deal pipeline for Thailand and we expect capital market activity to continue to increase the total market capitalisation of the Stock Exchange of Thailand,” adds Krishnamra.
Notably, Thailand’s Asset World Corp Public Company Limited had clinched the top spot on the region’s IPO leaderboard, raising US$1.38 billion in funds. Singapore’s Prime US REIT took second place with US$612 million raised.
On the local front, the Singapore IPO market also saw a four-fold increase in funds raised this year. As at Nov 15, 2019, the Singapore Exchange (SGX) raised a total of US$2.26 billion in IPO proceeds from 11 IPO deals, compared to US$551 million funds raised from 2018’s 15 IPO deals.
In particular, Tay noted that the local real estate sector continued to have a strong IPO record. With the exception of Japan, SGX continued to have the most number of REITs listed.
“This is largely due to tax transparency, the regulators’ progressive framework and strong secondary fundraising activity,” noted Deloitte, adding that stock exchanges will need to adapt to the changing landscape and stay relevant through innovation in order to continue attracting issuers.
Commenting on the outlook for 2020, Tay voiced guarded optimism for the region.
“For most companies, the public equity markets will remain the natural listing destination and the performance of capital markets is vital to the health of the economy. Based on the region’s growth potential, we expect the markets in Southeast Asia to remain dynamic and attractive to investors,” shares Tay.
“For Singapore, we are expecting a strong pipeline of listings from the REITs and service-based companies in 2020,” adds Tay. “We foresee that companies will be more discerning in weighing the pros and cons of an IPO vis-à-vis a private capital raising option.”
