IPO activity proves Southeast Asian markets robust despite crisis
Capital markets across Southeast Asia have remained resilient this year despite uncertainties from the global health crisis to the worsening US-China trade tensions and impact of the US presidential elections, according to Deloitte Southeast Asia.
Initial public offerings (IPOs) in the region over 10 and a half months this year bucked the overall downward trend to inch up to pre-Covid levels with up to US$6.44 billion raised in 100 IPOs. from 100 initial public offerings (IPOs).
Though the number of IPOs dropped by 38 per cent from 161 in 2019 and IPO proceeds dropped by 12 per cent from $7.34 billion, the total IPO market capitalisation in 2020 rose by 3 per cent to $25.96 billion.
The good news is capital markets in Southeast Asia appear to be navigating global economic headwinds well so far.
For the second consecutive year, Thailand remains in pole position for the highest funds raised across Southeast Asia.
Taking the top two spots on the region’s leaderboard this year are Thailand's Central Retail Corporation Public Co Ltd and SCG Packaging Public Co Ltd with $1.77 billion and $ 1.27 billion raised, respectively. The two listings collectively accounted for almost half of the total funds raised in Southeast Asia.
A stable economic growth, strong currency, low interest rates and consistently strong domestic liquidity allowed the Stock Exchange of Thailand to net $3.94 billion in IPO proceeds as of November 15, which accounted for 61 per cent of total funds in 2020 to emerge as one of the bright spots in the region.
This marks the fourth consecutive year that Thailand has raised more than $2 billion from IPO listings and the first time since 2015 to break the $3 billion mark.
"Thailand's IPO market continues to show its growth potential as one of the stronger IPO markets in Southeast Asia. Largely driven by homegrown companies and fuelled by increasing investor interests in firms focused on consumer businesses, it continues to appeal strongly to investors and fund managers," said Wilasinee Krishnamra, disruptive events advisory leader for Deloitte Thailand.
Across the border, the Malaysian stock exchange scored the biggest boost from the listing of Mr DIY Group, which raised $362 million, making it the largest listing in three years, while new listings fell to 18 this year, as compared to 30 listings in 2019.
Overall, Bursa Malaysia mustered a total fund raising of $481 million for 2020, registering growth from $447 million raised in 2019.
In the Philippines, the listing of AREIT marked the country's first-ever REIT (real-estate investment trust) listing, lifting the bourse with a $255 million IPO in August. The IPO contributed to 31 per cent of the total funds raised by the Philippine Stock Exchange, in addition to the 65 per cent of funds contributed by Converge Information and Communications Technology Solutions Inc, which raised $523 million.
Indonesia was responsible for 46 IPOs in the first 10 and a half months of 2020, which accounted for the highest number of IPOs across Southeast Asia in 2020. The high IPO activity can be attributed to the easing of listing for small and medium-sized enterprises since 2017.
Singapore saw its largest homegrown listing through Nanofilm Technologies International, which raised $345 million on the SGX Mainboard, a platform typically dominated by REITs listings in recent years.
As of November 15, the Singapore Exchange (SGX) raised a total of $852 million in IPO proceeds from eight IPO deals. In addition to Nanofilm Technologies, this includes two REIT IPOs on SGX Mainboard with $479 million funds raised and five deals on the Catalist board that raised $29 million. In comparison, the exchange raised $2.26 billion in proceeds from 11 IPO deals in 2019.
For some countries, REITs continue to remain an attractive asset class with low volatility, above-market dividend yields and provide exposure to high-quality properties, healthcare facilities, e-commerce or digitalisation related assets. The growth potential for REITs across Southeast Asia region is promising, given the region's population and urbanisation-led growth trends.
On the outlook for 2021, Tay Hwee Ling, disruptive events advisory leader for Deloitte Southeast Asia and Singapore, believes the region will continue to see good growth and expects an upswing in listings as a soon as a vaccine is proven safe and effective.
"Covid has made companies re-evaluate their business and growth forecast; and companies are looking into windows of opportunity to raise funds from stock markets to support their growth and stay resilient in this challenging climate. Though we are not out of the woods yet, the listing markets in Southeast Asia are still dynamic and attractive to investors.”
