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New listings down two thirds in Singapore

Global IPO markets have had their strongest first half of the year since 2007, but in Singapore, new listings have dropped by more than two thirds, as equity trading volumes remain weak.

SINGAPORE: Global IPO markets have had their strongest first half of the year since 2007.

According to data from Thomson Reuters, firms raised US$116 billion in the January-June period, up 70 per cent from a year ago.

But in Singapore, new listings have dropped by more than two thirds, as equity trading volumes remain weak.

The Singapore market went through one of its biggest scandals last October when three penny stocks crashed, wiping out around S$8 billion in market value.

Now, more than half a year later, investigations into those stocks are still underway, and analysts say confidence in the market has not returned.

"Back in 2005 and 2006, the Singapore market traded at about S$2 to S$3 billion dollars a day,” said Roger Tan, CEO of Voyage Research. “Now, it's down to S$800 million to S$1 billion-plus a day.

“I think now investors are looking at the Singapore market and saying that there's not enough liquidity; it's a market where the SGX seems to be more focused on doing their futures and commodity markets, rather than growing the capital markets."

According to analysts, the thinning of trades in the local bourse has deterred companies from listing here.

Singapore is the worst performing equity-raising destination in Asia so far this year.

In the first half, equity issuances -- including IPOs -- raised US$1.8 billion, down over 70 per cent from a year ago.

That is compared to high double-digit increases in other regional markets, and a whopping 172 per cent jump in Japan.

"There's also a lot of money, a lot of the funds, that have gone to other, I guess, sexier locations,” said Terence Wong, Head of Research at DMG & Partners Research. “Many investors think that Singapore is a boring location -- I think otherwise -- but these funds have been channelled to more developed markets like the US and Japan, and of course, more recently, to the hot Southeast Asian markets like Thailand and Indonesia."

In the terms of market performance though, the Singapore bourse is holding up.

The benchmark is up by more than 3 per cent to date -- in line with most key regional indices.

Still, the lack of liquidity in the market is worrying.

And analysts say this needs to be fixed soon, before more issuers and investors start to bypass Singapore.
 

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