Capital markets across Southeast Asia have performed well, producing 135 initial public offerings in the first 10½ months of 2018 and raising US$12 billion, says Deloitte.
The strong performance was led by Vietnam and Thailand, which respectively accounted for 52% and 26% of total funds raised. This compares with 178 IPOs for the whole of 2017, in which $13.5 billion was raised.
The top three blockbuster listings in Southeast Asia were from Vietnam and Thailand. Vinhomes Joint Stock Company took the top spot in Southeast Asia with $3.6 billion raised, followed by Thailand Future Fund, which raised $1.8 billion, and Vietnam Technological and Commercial Joint Stock Bank, which raised S$1.2 billion.
In Vietnam, IPOs raised $6.2 billion this year as of Nov 15, far exceeding funds raised in past years. Credit goes to the Vietnamese government's privatisation drive and market reforms, strong interest from foreign investors and local funds, and high GDP growth of 6.8% in 2018.
"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 Hwee Ling Tay, global IFRS and offerings services leader for Deloitte Southeast Asia and Singapore.
On top of their own local exchanges, companies in the region are looking overseas. In the past five years (2014-18), Southeast Asian companies raised $3.6 billion on overseas exchanges, indicating that companies in the region are open to exploring outside options to raise funds.
The most popular exchange outside of the region is Hong Kong, where $3.2 billion was raised by Southeast Asia companies in the last five years. But the average amount of cross-border IPO funds raised in 2018 is lower than the average raised by companies in their domestic exchanges within Southeast Asia.
Take Singapore, for example: in 2018, the average amount of funds raised by Singaporean companies listed in Hong Kong was $18 million per IPO, while the average raised by Singaporean companies listed on the Singapore Exchange (SGX) was $30 million per IPO.
"Traditionally, companies tend to list in the countries where they do their business in, which is typically their home country, where they have established their brand locally," Ms Hwee said. "However, the tide appears to be shifting, and companies are looking for opportunities in overseas exchanges.
"There are several reasons for this shift, for example, companies may feel that they want to raise capital in markets they hope to expand into, or they lack confidence in their local markets' ability to help them raise the funds they require to grow. This is where local bourses need to step up their game and educate their local companies on the benefits of listing locally."
In addition, another playing field has come about with Singapore's first private securities exchange, 1Exchange, launching this month. It provides private companies the ability to trade in their simplified securities by leveraging technology to create simple, regulated and cost-effective liquidity options for both private companies and investors. This presents another option for regional and global companies to raise capital.
In Singapore, the SGX saw 13 IPO deals this year as of Nov 15, with $715 million in funds raised, an 85% fall from 2017's $4.6 billion.
The healthcare and food and beverage (F&B) sectors continue to do well on the Singapore bourse. The past five years have seen 11 healthcare companies IPOs, performing at an average 17% share price (above water) to date. In the same period, six F&B companies listed with an average price-earnings ratio at IPO of 11.5, with sizeable funds raised and market capitalisation.
Looking forward to 2019, Ms Hwee expressed cautious optimism for Singapore's capital markets.
"Depending on the stability of the global economy, we can expect the IPOs that have been delayed in 2018 to seek listing in the first quarter of 2019, and potentially some IPOs from the REITs and also from the healthcare and F&B sectors," she said. "2019 will see increased vibrancy in the markets when some of SGX's initiatives in 2018 come to fruition, including the anticipation of the first dual-class shares listing since the announcement earlier this year."