Deloitte: Southeast Asia IPO market will decline sharply in the second half of 2024

A Deloitte report shows that the Southeast Asian IPO market declined sharply in the first six months of 2024, with market value plunging 71% to US$5.8 billion.

In the first half of the year, there were only 67 initial public offerings in the region, a year-on-year decrease of 21.2%. Funds raised by these IPOs fell 53.3% year-on-year to $1.4 billion.

Deloitte said that there were no blockbuster IPOs from January to June, and there was only one large-scale IPO with a market value of more than US$1 billion and financing of more than US$200 million. In the same period last year, there were three large-scale IPOs, each with a financing scale of more than US$600 million.

This marks a continued downward trend that began in the second half of 2022, according to Deloitte data.

Deloitte said the downward trend showed “subdued sentiment in the IPO market as investors and IPO candidates continue to grapple with macroeconomic factors.”

However, the report noted that historically, the second half “has been the better half of 2020 to 2022.”

Tay Hwee Ling, accountant at Deloitte Southeast Asia, said: “Despite Southeast Asia’s positive growth prospects and increasing foreign direct investment, the long-term geopolitical instability and high interest rate environment have been important factors affecting market conditions and investor sentiment in Southeast Asia,” and the report. Guaranteed leader.

Deloitte analysts warn that high interest rates are likely to persist in 2024 as governments address inflation.

Against this backdrop, investors are looking at “proven profitability and sustainable cash flow” rather than the growth-at-all-costs business model adopted by many companies between 2020 and 2022.

Indonesia, in particular, has seen the sharpest decline among all Southeast Asian countries.

“Indonesia, ranked first in 2023 [Southeast Asia] Deloitte analysts said that the IPO rankings experienced a sharp decline in the first half of 2024 as investors and investors interested in IPOs adopted a wait-and-see attitude in view of the presidential election in February 2024 and expectations for new economic policies.

From January to June, Indonesia’s listed market value plummeted 92.2% to US$1.22 billion, and IPO funds raised fell 89.1% from the same period last year to US$248 million. In the first six months of this year, the number of listed companies in Indonesia dropped to 25 from 44 in the same period last year, a decrease of 43.2%.

“While the Southeast Asian IPO market may appear sluggish in 2024, people are cautiously optimistic that conditions will improve after 2024,” Tay said.

Tay said interest rates are expected to fall in the future, which could encourage a return of REITs [real estate investment trusts] IPOs related to artificial intelligence are likely to go public in the near future, as many artificial intelligence companies are still in their early stages.

Tay said: “We expect that a large number of artificial intelligence IPOs will flood into the IPO capital market in the next few years, bringing innovation and new opportunities to the market.”