Will Singapore’s equity capital markets sustain its growth in 2H23?

In 1H23, equity capital raisings by Singaporean firms totalled US$2.6b.

Singapore’s equity capital market (ECM), alongside that of India and other Southeast Asian markets, could potentially benefit from investors seeking alternative growth aside from China in the second half of the year, according to an analyst.

Elaine Tan, senior analyst at Refinitiv Deals Intelligence, said the return of tourism to Southeast Asia may also uplift the ECM market of Singapore.

But Tan noted that the economic environment is still shifting and it can yet be determined if Singapore will be able to sustain its growth in 2H23.

In terms of sectors, she said technology, industrials, logistics, and retail could potentially benefit from the abovementioned factors.

In 1H23, the industrials sector accounted for 31% market share of Singapore’s ECM proceeds.

The two deals that bolstered the industrials sector’s market share were SATS Ltd’s US$598-m rights offering in Q1 to partially fund the acquisition of Worldwide Flight Services and Temasek raising US$292m from a block offering in Singapore Airlines in Q2.

Real Estate, meanwhile, continued to capture the majority of the ECM proceeds with 36% market share, raising US$933.6m, said Tan. She added that the 1H23 figure is 96% higher than the 1H22 record.

However, the deal that pushed the sector to the forefront was CapitaLand Ascendas REIT’s US$372-m placement launched in May.

Overall, Singapore’s ECM saw a threefold increase in proceeds in 1H23, with equity capital raisings by Singaporean companies totaling US$2.6b.

“Last year, a significant confluence of global factors including market volatility, geopolitical tensions, rising interest rates, recession fears and even pandemic uncertainty in some parts of Asia knocked down boardroom confidence and deal makers opted to remain on the sidelines,” Tan said.

“Despite persistent headwinds and uncertainty, Singapore’s ECM activity saw some recovery,” she added.

Across various types of ECM deals, Singapore also recorded growth.

Tan said ECM proceeds raised by Singapore-domiciled issuers in 2Q23 totalled US$1.5b, a 43% sequential growth from Q1 2023, and more than a three-fold increase compared with Q2 2022 figures.

“The activity was driven by follow-on offerings which grew three-times in proceeds from a year ago and number of issues jumped 73%,” the expert said.

In the initial public offerings (IPO) front, Singapore recorded a decline. In 1H23, Singapore had six IPOs worth US$54.6b, down 12.6% year-on-year (YoY).

“Three IPOs were launched in Singapore – all on the Catalist board – whilst the other three Singaporean IPOs opted to list in US exchanges. There were no SPAC listings in Singapore since Q1 2022,” Tan said.