September 18, 2024 | 12:00am
MANILA, Philippines — Optimism still surrounds the initial public offering (IPO) market in Southeast Asia despite a slow start in 2024, with more renewable energy (RE) listings seen powering up the Philippine IPO landscape.
The ASEAN Exchanges, a collaboration of the stock exchanges in Southeast Asia, said investors in the region continue to exercise caution given macroeconomic uncertainties, geopolitical tensions and high interest rates.
As a result, it said that the IPO markets in the region had a subdued performance in the first half where the markets raised around $1.4 billion, down from the $5.8 billion recorded in the same period last year.
Except for Singapore, the group of exchanges said that all other countries saw a decline in proceeds raised during the semester where Indonesia had the biggest decline.
However, it said that ASEAN remains a hotbed for high-growth stocks moving forward given the expected positive economic growth in the coming years which will create a favorable environment for IPOs.
The organization also sees the availability of quality start-ups in the region as a factor contributing to the positive IPO market outlook.
It added that several positive capital market initiatives aimed at enhancing market efficiency and attractiveness are being implemented across the region.
For the Philippine Stock Exchange (PSE), it is looking to bring in regulatory reforms and marketing campaigns to attract foreign investors into the local market.
The ASEAN Exchanges expect the entry of more RE listings in the Philippines given the government’s active promotion of RE development projects.
According to the organization, these efforts have led to companies seeking for external and capital market funding to expand their operations, resulting in a sizeable number of IPOs.
In the first half, the PSE has recorded two IPOs, raising $200 million at a market capitalization of $942 million.
“Both listings were from the energy and resource sector suggesting this remains a key IPO sector for the nation. It is also noteworthy that of the three new listings in 2023, two were from the RE sector,” the ASEAN Exchanges said.
The organization also believes that the IPO of RE firm Nexgen Corp. last July would encourage other RE firms to seek for public listings.
“The IPO markets in the ASEAN region have demonstrated resilience and growth despite facing numerous challenges. Indonesia, Thailand, and Malaysia have been the most active markets, contributing significantly to the funds raised. Singapore continues to be a hub for start-ups, while Vietnam and the Philippines are taking steps to overcome their recent downturns,” the ASEAN Exchanges said.
For the organization, a significant challenge needed to be addressed to sustain and enhance the market’s attractiveness in the region is falling investor sentiment, primarily due to poor share price performance of companies post-listing.
“Several companies have seen their share prices decline significantly after going public, which has affected investor confidence and led to reduced participation in new IPOs. This trend is particularly shown in markets like Philippines and Vietnam in recent years, where macroeconomic uncertainties and market volatility have impacted post-IPO performance,” the ASEAN Exchanges said.
“As the region continues to navigate economic uncertainties and geopolitical challenges, the overall outlook remains cautiously optimistic, with potential for growth driven by strategic reforms and sector-specific opportunities,” it said.
Aside from the PSE, the current member exchanges of the ASEAN Exchanges are Bursa Malaysia Berhad, Indonesia Stock Exchange, Singapore Exchange, The Stock Exchange of Thailand and Vietnam Exchange.
The PSE has set a target of six IPOs and about P175 billion worth of capital to be raised for 2024.
So far three companies went public this year, with NexGen following the successful market debuts of OceanaGold Philippines Inc. and Citicore Renewable Energy Corp.
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