- POSTED: 10 Oct 2013 00:01
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Southeast Asia saw US$11 billion of IPO listings in 2012, but investors are becoming more cautious due to the economic gridlock in the US.
SINGAPORE: Southeast Asia is stepping up as a viable initial public offering (IPO) market alternative to China since almost a year ago when China's IPO watchdog suspended IPOs.
According to Mergermarket, the region saw US$11 billion of listings in 2012. But with the economic gridlock in the United States having ripple effects worldwide, analysts say investors are becoming more cautious.
The year has been a rollercoaster for Southeast Asia's IPO markets. They were on the rise before May -- when US Federal Reserve Chairman Ben Bernanke mentioned “tapering” -- scaring investors and igniting vast capital outflows from the region.
HSBC managing director and head of advisory for Singapore Alvin Lim said: “We have seen a slowdown, and really investors are a bit more cautious because markets are volatile. So for them, they have to come in at the right price.”
But with tapering now possibly on hold, investors appear to be cautiously optimistic.
Malaysian port operator Westport Holdings' IPO was oversubscribed by five times last month, listing at the top end of its range of RM2.30 to RM2.50 a share, raising about US$680 million.
Several strong real estate investment trusts (REIT) offerings helped Singapore raise US$1.7 billion in the third quarter, up 39 per cent from Q2.
In the first 9 months of the year, Singapore IPOs raised a record S$4.3 billion, driven largely by REITs, including SPH REIT, OUE Hospitality Trust and a S$1.6 billion listing by Mapletree Greater China Commercial Trust.
Singapore Exchange senior vice president and head of listings Simon Lim said: “The good news is there is liquidity out in the market, and obviously the liquidity is looking for a reason and a home to deploy the funds.”
According to Dealreporter, Southeast Asia has seen 56 IPOs raising US$4.4 billion so far this year, compared to Hong Kong's 44 listings, which raised US$7.3 billion.
However, experts expect the remainder of the year to be volatile.
Mr Lim said: “Again, investors will remain cautious. And if the economic conditions continue to be where we are, I think the IPO pipeline could slow down for the rest of this year.”
With the world's largest economy ensnared in economic grid-lock, the IPO market here in Southeast Asia could be in for a bumpy ride.