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SINGAPORE (July 4): Geopolitical uncertainty, trade issues and macroeconomic conditions are dampening investor enthusiasm for initial public offerings (IPOs), according to the quarterly Global IPO trends: Q2 2018 report published today by professional services firm EY.
Singapore saw its IPO activity fall 60% y-o-y in 2Q18, with four IPOs during the quarter raising just US$0.07 billion ($0.10 billion) – some 79% lower than the corresponding quarter last year.
Year-to-date, this brings the total number of IPOs in the city-state to seven, down 30% compared to a year ago.
“There have been no major developments since Q1 and the Asean IPO market while active, with a slight increase vis-à-vis Q1, has not stirred with any major activity in Q2,” says Max Loh, EY Asean and Singapore Managing Partner, Ernst & Young.
“Geopolitical uncertainty, trade tensions and emerging market concerns continue to weigh down on IPO activity in Asean,” he adds. Asean saw a 33% dip in IPO volume to 26 IPOs in 2Q18, but IPO proceeds surged 80% to US$3.1 billion on the back of the strength of listings on Vietnam’s main markets.
According to EY, Vietnam led the way in IPO proceeds for Southeast Asia in 2Q18 with two sizeable listings, while IPOs in other parts of the region — Thailand, Indonesia, the Philippines, Malaysia and Singapore — have predominantly been small-cap listings.
The firm expects this trend to continue into the second half of 2018.
Globally, IPO activity decreased by 21% to 660 IPOS in 1H18. Despite this slowdown, global IPO markets raised US$94.3 billion during the period, up 5% y-o-y.
“The good news is that economic conditions continue to be encouraging, equity valuations are high in many parts of the world and interest rates remain low. As a result, we expect a resurgence in IPO activity during the second half of 2018,” says Martin Steinbach, EY Global and EMEIA IPO Leader.