SINGAPORE - A recent study by Deloitte has highlighted a significant downturn in the initial public offering (IPO) activity across Southeast Asia, with the region witnessing its lowest level of funds raised in eight years. Despite a number of IPOs taking place across major stock exchanges in Singapore, Indonesia, Thailand, Malaysia, Vietnam, and the Philippines, the total capital accumulated in 2023 fell sharply compared to the previous year.
The analysis showed that throughout 2023, there were 153 companies that went public in the region, securing around $5.5 billion. This figure represents a decline from the $7.6 billion raised through 163 IPOs in 2022. Indonesia stood out as the most active market within Southeast Asia, hosting 77 IPOs that brought in $3.6 billion. This accounted for half of the region's listings and 60% of the total amount raised, catapulting Indonesia to the fourth-strongest stock exchange globally this year, trailing only behind China, the United States, and the United Arab Emirates.
The sectors that dominated this year's listings were notably aligned with global trends towards sustainable energy and transportation. Companies from the electric vehicle market and renewable energy sectors were prominent as countries increasingly focus on achieving carbon-neutral economies. Additionally, the consumer industry continued to show strength due to a burgeoning young middle class with growing disposable income.
Despite these developments, Southeast Asian companies are exploring cross-border IPOs driven by expectations of better valuations and increased liquidity. Industry comparability and investor familiarity with certain sectors also contribute to this trend.
Globally, the challenge of sustaining an active cash equities market persists as IPO activity reverts to pre-pandemic levels. This is partly due to companies opting to remain private for longer periods amid a complex macroeconomic landscape.
In particular, Singapore's IPO performance was subdued with only five listings on the Catalist board raising $29 million for the year. The absence of significant mainboard IPOs was noted, especially those typically involving real estate investment trusts (REITs) and special purpose acquisition companies (SPACs). The high Federal rates have prompted a capital shift towards the United States as investors seek more attractive returns.
Analysts at Deloitte pointed out that despite these challenges, there is potential for a rebound in markets like the Philippines once interest rates stabilize. Currently, however, the Philippine Stock Exchange (PSE) has seen a modest contribution to regional IPO activity, garnering just $81 million from three company listings in 2023. This represents only 1.47 percent of Southeast Asia's total and reflects a broader trend where Indonesia, Thailand, and Malaysia collectively secured $5.4 billion or 98 percent of all funds raised in the region within the first 10.5 months of this year.
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