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SINGAPORE: Analysts said on Friday the market for initial public offerings (IPO) in Singapore is unlikely to see a robust recovery in the second half of the year. To date, only four IPOs have been launched and some say it may hit just over ten for the entire year.
This is compared to 23 listings on the Singapore Exchange in 2008 and 55 in 2007. Market watchers also expect the value of IPOs to be smaller.
The collapse of US investment bank Lehman Brothers last September triggered a meltdown in the global financial system, shattering market confidence.
Peter Elston, strategist, Aberdeen Asset Management Asia, said: "The recent IPO in Singapore, I think it was Teho, is a good example of how fragile that confidence is. You saw the share prices going up very strongly on the first day of trading, then go straight back to its issue price."
Analysts said the renewed interest in IPOs among many Chinese firms will have some positive impact on Singapore's capital market. But it is unlikely to stage a strong comeback for new issues this year.
"One of the reasons there is a bit of an excitement about the IPO market this year is because of all the other capital raisings that have happened... that can distort the picture a little bit because a lot of these rights (issues and public offerings) have been made out of desperation and so, one can get a false sense of security by thinking that that bodes well for the IPO market," said Elston.
Experts said there is talk of a couple of Real Estate Investment Trusts (REITs) going public in the months ahead.
Growth sectors like energy, infrastructure, green technology, transportation and pharmaceuticals could also throw up some potential offerings. But analysts also warned that companies may decide to float their shares elsewhere.
Terence Wong, senior vice president, DMG & Partners Securities, said: "SGX is facing some keen competition – Bursa Malaysia is coming out with China-based company. I believe that was supposed to come over to SGX.
"I heard that some companies are also going over to Korea. They are looking at it as a possible option because over there, these companies are promised better valuation."
So far, four companies – Teho International, Japan Food Holdings, Westminister Travel, Heatec Jietong – have launched IPOs this year. The first three Catalist listings raised about S$17 million in total.
Subscriptions for Heatec Jietong are closing on Monday. The company hopes to raise some S$3.7 million from an IPO on the Catalist board.
Observers said while risk appetite has improved, investors are now weighing their options more carefully. They will demand more information about the company's track record, growth prospects and governance.
- CNA/so
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