Southeast Asia’s bourses saw a four-per cent rise in IPO deal volume and 11 per cent growth in value this year from a year earlier, bucking a global downtrend caused by geopolitical uncertainty and trade tensions, according to the latest data from consultancy firm EY.
While global IPO activity dropped in terms of deals and proceeds, Southeast Asia’s exchanges saw 126 IPOs raising $8 billion in proceeds this year, marking the only region in the world to post growth in terms of deals and value, EY said.
In the fourth quarter alone, Southeast Asia’s exchanges saw a total of 39 IPOs raising $4.2 billion, up from the 38 IPOs that raised $1.9 billion in the third quarter.
Indonesia’s stock exchange leads the pack in Southeast Asia with 54 IPOs raising $1.1 billion. Malaysia’s bourse followed with 29 IPOs cornering $500 million and Thailand’s exchange posting 27 IPOs raising $3.3 billion). Singapore chipped in 11 IPOs raising $2.8 billion while the Philippines saw four IPOs raising $400 million.
For the greater Asia-Pacific region, deal volumes (668) were down by 1 per cent and proceeds ($89.9 billion) dropped by 8 per cent from a year earlier. However, the region continued to dominate global IPO activity this year, accounting for seven of the top 10 exchanges globally by deal number and five of the top 10 exchanges by proceeds.
“Although Asia-Pacific exchanges remained resilient in 2019 against continuous geopolitical and trade uncertainty, we expect a modest decline of IPO activity in 2020, more probably int he second half of 2020,” EY said.
Mainland China saw an increase in IPO activity in the fourth quarter, buoyed by the early success of Shanghai’s STAR Market. Deal volumes in Mainland China were up by 89 per cent to 197 deals while proceeds increased by 69 per cent to $35.7 billion from a year earlier.
The Hong Kong Stock Exchange saw a 25- per cent decline by deal number (154 IPOs), but a 4% increase by proceeds ($37.9 billion).
“Despite the geopolitical and trade uncertainty that prevailed throughout much of the year, Asia-Pacific IPO markets performed somewhat steadily in 2019. As we move into 2020, we expect IPO activity to pick up though this would still be moderated by ongoing trade and economic headwinds and investor confidence,” said Max Loh, EY Asean IPO Leader and Managing Partner, Singapore and Brunei.
Across Southeast Asia, Loh expects that IPO activity will continue to be dominated by entrepreneurial companies coming to the public markets.
Globally, overall IPO activity was down in terms of deals and proceeds, with geopolitical uncertainty and trade tensions heavily impacting this year’s IPO landscape. There were 1,115 IPOs raising $198 billion in proceeds, a 19-per cent drop in deal volume and a 4-per cent decline in proceeds compared to 2018, the report added.
A healthy increase in IPO activity, however, is expected in 2020, particularly in the first half of the year, as the US-China-EU trade tensions, concerns about economic growth, and other geopolitical issues subside. The markets are also expected to become more volatile leading up to the US Presidential elections, the report said.
“As we head into 2020, we anticipate that some of the geopolitical uncertainties and trade tensions that plagued the IPO market in 2019 will fade. Market volatility will remain, and owners with the ambition of a successful IPO in the near-term will need to be prepared to take advantage of the windows of opportunity expected in the early part of 2020,” Paul Go, EY Global IPO Leader, said.
EY expects 2020 deal numbers to exceed 2019 levels on the back of a healthy pipeline of IPO candidates.