Singapore IPO market languishes as Hong Kong surges

Singapore IPO market languishes as Hong Kong surges

TODAY reports: As the Singapore Exchange languishes with only one IPO listed on the mainboard this year, Hong Kong has been on a tear as it reclaims its position as the world’s top IPO market.

By Angela Teng, TODAY
Posted 29 Dec 2015 09:06

SINGAPORE: The number of initial public offerings (IPO) on the Singapore Exchange (SGX) plunged 57 per cent this year from last year, with analysts attributing the lacklustre performance to a weak market outlook and competition from a much stronger Hong Kong.

Only 13 IPOs were listed on the SGX this year — just one on the mainboard and the other 12 on Catalist, raising a total of about S$630 million. This compared to the 30 IPOs last year, of which 12 were on the mainboard and 18 on the junior board, raising about S$3.5 billion altogether.

BHG Retail Real Estate Investment Trust (REIT) raised S$394.2 million when it listed on the mainboard this month, making it the biggest IPO in Singapore for the year. The units closed unchanged at S$0.80 on its debut day after the underwriter emerged to support the market. At the close on Monday (Dec 28), BHG Retail REIT units remained at S$0.80. Most of the Catalist-listed IPOs, which had offer prices ranging from S$0.20 to S$0.46, gave investors little cheer this year.

Mr Ernest Lim, a remisier at CIMB Securities, said: “Performance of the new listings had more than half registering negative returns, with five of them registering almost 40 per cent drops since their debut. While two of them registered flat returns and two of them, namely Jumbo and Singapore O&G, soared 48 per cent and 198 per cent, respectively … the overall performance is not exactly fantastic.”

“Most clients traded less this year as they are cautious on the overall market environment, slowing China economy, weak Singapore economy and generally lacklustre corporate results,” he added.

As the SGX languishes, Hong Kong has been on a tear as it reclaims its position as the world’s top IPO market. In the first 11 months of the year, 71 companies listed in the city, raising a total of US$31.2 billion (S$43.9 billion), accounting for almost 16 per cent market share of IPO funds worldwide, the South China Morning Post reported.

IG market strategist Bernard Aw said: “Firstly, the red-hot Hong Kong IPO market may have drawn companies away from listing in Singapore … Hong Kong benefited from its proximity to mainland China, compared to Singapore. We can see this advantage quite clearly from the growing number of mainland firms listing in Hong Kong.”

“Secondly, the higher financial bar for a mainboard listing in Singapore (minimum market value of S$150 million or pre-tax profit of at least S$30 million) may have continued to disqualify medium-sized companies, which earned about S$20 million.”

The poor IPO market came amid a turbulent year for the SGX. In June, the bourse had to pony up an estimated S$20 million to address gaps in its service recovery capabilities after it was reprimanded by the Monetary Authority of Singapore over two trading outages last year, one of which brought trading to a halt for hours and hurt Singapore’s reputation as a financial centre.

In July, veteran banker Loh Boon Chye took over from Mr Magnus Bocker as chief executive to spearhead a revival in the fortunes of SGX. In September, local shares plunged in line with other Asian markets following a slew of weak Chinese economic data, with the Straits Times Index falling past the key 2,800 mark. On Monday, the benchmark ended at 2,875.32 in thin year-end trade.

The SGX toughened up its rules on corporate governance in October and this month launched a listing compliance bulletin as part of moves to increase transparency on disciplinary actions.

“At the moment, the initiatives are not directly geared towards attracting new public listings. The new changes at SGX are certainly welcoming, and should provide a fresh start for Singapore’s stock market, but it remains to be seen how they can attract more IPOs,” said Mr Aw.

Read the original TODAY report here.

-TODAY/ek

-wong chee tat :)