SINGAPORE: While the initial public offering (IPO) markets in the United States and Europe struggle to lift themselves out of the wreckage of the technology crash, Singapore is the fastest growing market for new offerings in the world this year.
Last week alone, three companies made their debuts on the Singapore Exchange (SGX), including Malaysia's sewage and water treatment firm Eco Water Ltd. It bolted 134% above the issue price on its first day, making it front-page news in a nation of active small investors eyeing a quick trading profit.
Singapore plastic parts maker Juken Technology closed its first-day trade on Friday 36% above its issue price after its IPO was 35.4 times subscribed.
And the pace has been hot for most of this year.
In June, nine companies were listed, compared with eight listings for the whole US market in the first six months of 2003, according to Thomson Financial data.
Singapore was the fastest growing IPO market in the world in the first half, with issues growing more than 18-fold to US$566.4mil, the Thomson Financial data showed. In contrast, there was an 86% slump to US$1.89bil in the United States and a 73% fall in Britain to US$1.03bil.
Singapore ranked eighth in the world by value, but was the world’s fourth biggest by number of issues with 21 IPOs. It was behind China, which was the world’s biggest with US$2.1bil from 33 IPOs, but easily outpaced its more direct regional rivals, in particular Hong Kong.
Singapore’s reputation as a politically stable nation with high corporate governance standards has helped it attract the foreign listings – particularly from China – it needs to grow.
“Hong Kong has a reputation for being somewhat more speculative. There is less political risk in Singapore,” said Jay Ritter, an IPO expert and professor of finance at the University of Florida, in explaining Singapore’s attraction.
IPO issuance in Hong Kong in the first half crashed 77% to US$157.6mil from 18 IPOs.
Goh Chyan Pit, DBS Bank's managing director, equity capital markets, said there had been a limited number of foreign companies here and the scarcity factor appealed to would-be issuers.
“It’s being a big fish in a small pond. They’re likely to receive greater attention from the investing community,” he explained.
The Hong Kong-based Political & Economic Risk Consultancy said companies were also drawn to Singapore because they wanted to be associated with the country’s stricter regulatory system. – Reuters
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