SINGAPORE (Nikkei Markets) -- The Singapore Exchange was among the hardest hit in Southeast Asia this year as new company listings shriveled, hurt by market volatility and geopolitical tensions.
While SGX's recent initiatives such as allowing dual class shares and tie-ups with Nasdaq and the Tel-Aviv Stock Exchange could help improve the picture in 2019, regional competition to attract listings would increase in coming years as other countries continue to develop and stabilize their capital markets, PwC said.
A report by the consultancy showed that companies listing on the SGX raised just 730 million Singapore dollars ($532 million) as of end Wednesday, down around 84% from S$4.7 billion in 2017. The proceeds were the lowest since 2015 and the second smallest in the last decade.
PwC attributed the drop in Singapore IPOs to volatile markets, noting that many bourses around the world also recorded fewer new listings.
The dearth of new IPOs was compounded by several delistings from SGX as well as the growing popularity of overseas listings by companies based in Singapore, historically a choice venue for issuers from around the region.
Although competition within the region to attract listing hopefuls was set to increase, PwC described the Singapore IPO pipeline for 2019 as "optimistic," with new listings expected in sectors such as technology, real estate investment trusts, health care and food and beverage.
"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," PwC said.
Third500, an affiliate of U.S. investment bank Healthios Capital Markets, helps privately held companies prepare for listings. In August, Third500 and SGX said they were working together to build a pre-IPO and IPO market for venture capital-backed companies.
PwC and other market players also said SGX would likely see a rise in new listings next year following a change in listing rules earlier this year to accommodate companies with dual-class shares structures.
"We can expect the IPOs that have been delayed in 2018 to (resume) in the first quarter of 2019," added Tay Hwee Ling, a partner at Deloitte.
SGX has struggled to attract new listings in recent years, hurt by thin trading volumes and low valuations for smaller companies as well as various controversies such as the alleged accounting irregularities at commodities company Noble Group, which is currently being investigated by Singapore authorities.
PwC said 24 companies delisted from SGX this year, unchanged from 2017, while EY, in a report earlier this week, noted that 15 Singapore companies chose to list abroad in 2018, with the majority heading to Hong Kong Exchanges and Clearing's GEM market for small to mid-sized companies.
Turning to Southeast Asia, EY said the number of IPOs in the region fell by 7% in 2018 while proceeds declined by a heftier 34%.
EY, however, expects the region to see "a modest increase" in the number of small and midsize IPOs next year, particularly in the second half when geopolitical factors such as elections and the trade war between the U.S. and China are expected to subside.
The Indonesia Stock Exchange led the region with 53 IPOs as of end-November, or 45% of the total, according to EY.
Bursa Malaysia was the region's worst performer, with funds raised from IPOs falling more than 90% from a year ago, Deloitte said.
Vietnam and Thailand led Southeast Asia in terms of proceeds as both countries benefitted from sizable IPOs during the period, all three consultancies added.
"With the Vietnam Finance Ministry proposing to remove the 49% foreign ownership cap for listed companies, and the stock exchange streamlining the listing and IPO process, we can expect the Vietnam IPO market to continue to do well in the next few years," said Deloitte's Tay.
--Kevin Lim
