A recent study by Deloitte has illuminated a substantial decline in initial public offering (IPO) activity across Southeast Asia, marking the region’s lowest level of funds raised in eight years. Despite numerous IPOs occurring on major stock exchanges in Singapore, Indonesia, Thailand, Malaysia, Vietnam, and the Philippines, the total capital amassed in 2023 witnessed a sharp decrease compared to the previous year.
According to Deloitte’s analysis, 153 companies went public in the region throughout 2023, securing approximately $5.5 billion. This figure represents a notable downturn from the $7.6 billion raised through 163 IPOs in 2022. Indonesia emerged as the most active market in Southeast Asia, hosting 77 IPOs that generated $3.6 billion. This accounted for half of the region’s listings and 60% of the total amount raised, positioning Indonesia as the fourth-strongest stock exchange globally this year, trailing only behind China, the United States, and the United Arab Emirates.
Sectors dominating this year’s listings aligned with global trends, particularly in sustainable energy and transportation. Companies in the electric vehicle and renewable energy sectors took center stage as countries increasingly focus on achieving carbon-neutral economies. Additionally, the consumer industry showed strength, driven by a burgeoning young middle class with growing disposable income.
Despite these trends, Southeast Asian companies are exploring cross-border IPOs, anticipating better valuations and increased liquidity. Industry comparability and investor familiarity with certain sectors contribute to this shift.
Globally, sustaining an active cash equities market remains challenging as IPO activity reverts to pre-pandemic levels. Companies are opting to stay private for longer periods amid a complex macroeconomic landscape.
Singapore’s IPO performance was subdued, with only five listings on the Catalist board raising $29 million for the year. The absence of significant mainboard IPOs, particularly involving real estate investment trusts (REITs) and special purpose acquisition companies (SPACs), was notable. High Federal rates have prompted a capital shift towards the United States as investors seek more attractive returns.
Deloitte analysts noted that despite challenges, there is potential for a rebound in markets like the Philippines once interest rates stabilize. Currently, the Philippine Stock Exchange (PSE) has seen modest contribution to regional IPO activity, garnering just $81 million from three company listings in 2023. This represents only 1.47 percent of Southeast Asia’s total, highlighting a broader trend where Indonesia, Thailand, and Malaysia collectively secured $5.4 billion or 98 percent of all funds raised in the region within the first 10.5 months of this year.