The totals funds raised on the Singapore Exchange in 2018 nosedived by 84 per cent to S$730 million, due mainly to US-China trade tensions and the rising interest rate environment.
SGX raised the amount from 15 initial public offerings – three on the mainboard and 12 on the Catalist board – as of 19 December, according to PwC’s “Equity Capital Markets Watch – Singapore: 2018 year in review” report released on Thursday (20 December). The amount for 2018 was in stark contrast to the S$4.7 billion raised in 2017 from 20 IPOs – seven mainboard listings and 13 Catalist board listings – and was the second lowest since 2008.
The tepid numbers for SGX reflect the lacklustre global IPO market, which has been experiencing the headwinds of trade and geopolitical tensions, with 870 IPO deals in the first nine months of this year, down from 1,081 in the same period a year earlier.
While the number of global deals had fallen, the total proceeds raised increased to US$160.6 billion (S$220 billion) from US$141.4 billion over January to September. This can be attributed to robust IPO activity in both the Americas as well as Hong Kong.
“Singapore’s capital market activity is not spared from market volatility due to the openness of our economy and there are significant foreign funds under management here,” said PwC Singapore’s capital markets leader, Tham Tuck Seng.
“But we see a silver lining; we still think that the IPO pipeline remains optimistic in 2019 given Singapore’s pro-business environment,” Tham said. He expects to see more fund raising activity from sectors such as real estate investment trusts and business trusts, healthcare and food and beverage.
SGX saw four healthcare companies debut on the Catalist market in 2018 – Asian Healthcare Specialists, Hyphens Pharma International, Medinex, which closed above their IPO price by 48 per cent, 6 per cent, and 12 per cent, respectively, while Biolidics fell 16 per cent below its IPO price on the first day of trading.
Singapore’s listed healthcare sector, as measured by the SGX All Healthcare Index, fared better than the Straits Times Index, recording a smaller decline of 6 per cent, compared with a 10.4 per cent drop on the mainboard, as of 19 December.
Technology sector listings will make their presence felt in 2019 when SGX’s partnerships with Tel Aviv Stock Exchange, NASDAQ and Third500 come to fruition.
Strong fundraising in Thailand and Hong Kong
According to the PwC report, there has been relatively sizeable capital activity in other markets, such as Thailand and Hong Kong.
Thailand’s IPO market recorded 21 listings as of 15 December, raising a total of US$2.4 billion. This was largely attributed to two listings in October 2018 – Osotspa, a Thai food and beverage conglomerate which raised US$400 million, and Thailand Future Fund, an infrastructure trust which raised US$1.3 billion.
The Hong Kong Stock Exchange (HKEx) recorded the world’s largest IPO in August, when the listing of telecoms tower operator China Tower Corporation raised US$7.5 billion.
HKEx introduced a listing regime for weighted voting rights on 30 April 2018, which is largely similar to the dual class shares listing introduced by SGX.