Southeast Asia Q1 IPO Surge Unlikely To Sustain Amid COVID-19 Crisis

Listing plans in the pipeline in Singapore are likely to be impacted in the next few quarters owing to their over-reliance on the real estate sector as COVID-19 pandemic casts a shadow across businesses.

International Financing Review (IFR) editor (Asia) Steve Garton said in a webinar, organized by Refinitiv Asia, “We have already seen problems from real estate investment trusts, whose portfolios are hospitality assets, hotels or shopping malls.”

At a regional level, Southeast Asia’s initial public offering (IPO) market, which bucked the Asia-Pacific downtrend in the first quarter, is also unlikely to maintain the momentum.

SE Asia’s IPO market saw its total deal spike to almost 800 per cent year on year to $3.48 billion, data compiled by Refinitiv Asia showed.

The surge, however, was mainly driven by the largest-ever IPO in Thailand – the $2.5-billion listing of Central Retail Group.

“The IPO volume looks quite good, but under the number there, the trend is not that positive,” said Garbon, adding that the IPO market in Southeast Asia remains very small in the Asia Pacific.

Meanwhile, the first quarter was the slowest start to a year for Asian equity raising since 2016, stood at $43.5 billion.

While the overall capital market is slow as most countries are in lockdown since March, he foresees a healthy IPO pipeline in China, underpinned by its government reform which makes it easier for companies to go public.

“Unlike in previous crises, China has not restricted A-share issuance to support the markets. Onshore China IPOs grew 3 times in the first quarter and the pace remains high,” he said.

Refinitiv Asia data also showed, Asia equity capital market pipeline stands at $56.9 billion, excluding A-share offering. China still dominates the Asia pipeline, and Hong Kong remains the most popular listing venue.

Jumbo equity issues slated for 2020 include China Bohai Bank (Hong Kong, up to $3 billion), China Yangtze Power (London, $5 billion), JD.com secondary listing (Hong Kong, $5 billion).