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IPO market picks up after a lacklustre first half of year

Analysts say the increase is likely to continue for the rest of 2014, with an improving global economic outlook and positive sentiment on earnings growth creating a favourable environment. 

SINGAPORE: After a slow start to the year for initial public offerings, there has been a surge in activity this month.

For the month of July alone, there have already been two listings on the mainboard and two on Catalist - raising almost S$500 million dollars. This is compared to a total of two mainboard and six Catalist listings in the previous six months.

Market watchers say the deadline factor could be one of the reasons behind the sudden surge in IPOs for July. "Most of the companies have financial year end on December 31 and the prospectus, those financial information can only be valid for six months, which means that all these companies with Dec 31 year end have to rush to file their prospectus, lodged with MAS by June 30," said Mr Tham Tuck Seng, Head of Capital Markets, PwC Singapore.

"Which means that we will see a number of listings in July just to meet this deadline. So that's one of the key factors. And if you look at in the past, 2013 July, it's the same trend where in July we see a lot of listings."

Analysts say the increase in IPOs is likely to continue for the rest of 2014, with an improving global economic outlook and positive sentiment on earnings growth creating a favourable environment for companies to launch their initial public offerings.

Analysts expect IPO activity to continue ramping up this year, as investors react to favourable global economic conditions. They say Singapore will remain attractive as a listing destination for real estate investment trusts (REITs) and business trusts, given the supportive tax structure and regulations here.

"We are bullish on the IPO market for Singapore going into the second half. Singapore remains the forefront of capital markets for ASEAN. It is still the favoured listing jurisdiction for REIT and business trusts listings, said Matthew Song, Head of Equity Markets, South East Asia/Global Banking, HSBC. 

"(On the REIT and business trust sector) we continue to see the listings on the Singapore mainboard and investors will focus on the asset quality, on the sustainable growth of the trust, the cost of gearing for the trust and obviously the track record of the sponsor."

Analysts say equities, in general, are appearing more attractive to investors as markets seem to be stabilising, and this creates a more conducive environment to support IPO activity and equity investment. 

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