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Singapore Exchange is facing its worst year for IPOs in five years, as low trading volumes and weak performances by already-listed shares keep investors away from new offerings, according to media reports.
In a report by the Wall Street Journal, Data provider Dealogic revealed that only four mid-sized new listings have begun trading on the exchange’s main board this year – two are trading below offering prices while the other two are little-changed.
Notably, the benchmark stock index posted poor performance, gaining only 4.9 percent so far this year, underperforming its regional peers in Indonesia, Thailand and the Philippines – all of which are up 17 percent to 18 percent.
This bleak scenario caused Indonesian oil and gas producer Samudra Energy to delay its IPO, media reports revealed.
Local investors attributed the poor performance of this year’s listing to the type of companies entering the market.
“If you look at some of the business models, they are just not as attractive as we would like,” stated Kenneth Tang, a senior portfolio manager for Singapore and Southeast Asia at Nikko Asset Management.
Real estate investment trusts and business trusts – which are popular in Singapore due to their high-yields – are the only bright spot in Singapore’s IPO market.
To date, the FTSE Straits Times REIT index is up 7.2 percent, but the value of trust listings dropped by more than 50 percent.
Concerns about the city-state’s property market and higher interest rates globally have slowed interest in trust listings.
Citi warned that the gains enjoyed by REITS in Q2 have “given way to under-performance, both against the developers and the broader market.”
The bank noted that REIT performance is increasingly macro-driven “as investors come to the realization that headwinds abound everywhere one looks.”
Meanwhile, Singapore Exchange still has two other IPO in the pipeline this year – namely, Singapore incorporated-firm IREIT Global and Indonesian poultry and dairy company, Japfa Ltd.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this and other stories, email nikki@propertyguru.com.sg
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