ON Jan 31, SGX welcomed Resources Global Development to the Catalist Board, with the second listing of 2020 scheduled to debut on the Mainboard this week. The Indonesian-focused coal trading and shipping services operator was Singapore's first IPO for the 2020 calendar year.
This follows on from 2019, which saw the average number of IPOs across the key exchanges of the four Asia-Pacific financial centres (Tokyo, Sydney, Hong Kong and Singapore) decline 23 per cent from 2018. Singapore saw the second biggest drop in its relative number of IPOs across the four exchanges, with 11 IPOs for the 2019 calendar year compared to 15 IPOs in 2018.
Nevertheless, the number of IPOs is more than a numbers game, and last year the regional numbers were, for the most part, symptomatic of nothing other than economic growth.
Firstly, last year's fall in the number of regional IPOs coincided with the lowest global growth rate for the past 10 years. All indications are that Singapore's economy officially grew by 0.7 per cent, compared to 3.1 per cent in 2018.
However, similar to 2018, the US economy held its own, and as emphasised by Federal Reserve chair Jerome Powell last week, the US expansion in its eleventh year is currently the longest on record. It was hence, no coincidence, that the majority of the four sizeable property trusts that listed in Singapore in 2019 exclusively invest in the United States.
It was also no coincidence that back in 2012, Australia-based Civmec finished the year as Singapore's strongest performing IPO of the year. The same month that Civmec listed, the IMF predicted that Australia would be the best-performing major advanced economy in the world over the next two years. For many sectors, economic growth comes in cycles, which affects the timing of capital raising to fuel corporate growth.
Secondly, growth outlooks are just as important as growth rates and last year's outlooks were hazy. Many Singapore companies are on the leading edge of global trade, and prudently prepared for economic growth deceleration last year. Much of this had to do with the uncertainty of global trade policy, or to be more clear, uncertainty for international business, which can impact and potentially put on hold plans to expand revenue and capital. Singapore small and medium-sized enterprises generally generate half their revenue from overseas.
Even TrickleStar, which listed on Catalist in June last year commented in its H1FY19 financial report that the most significant factor its management faced was the continued imposition of tariffs by the Trump administration.
Yet, prior to this, TrickleStar pressed ahead with its June 18 listing with an initial offer price of 26 cents per share. Last week its shares ended at 41 cents per share. As reported in previous Inside Insights columns, multiple TrickleStar directors have also added to their TrickleStar shareholdings during the 58 per cent ride up. On the other side of the coin, the least performing of Singapore's 2019 IPOs was one of the four property trusts - Eagle Hospitality Trust.
Thirdly, economic wellbeing, resilience and improvements are not always about growth rate. Last year, the city state saw plenty of green lights and economic advancements beyond the 0.7 per cent topline growth rate that will pay dividends for decades to come. Similarly, SGX-listed companies listed in previous years raised a sizeable S$8.8 billion in gross placements and rights issues in 2019.
Key sector stocks also very much moved in tandem with global peers, providing competitive opportunities for investors to diversify portfolios in Singapore. Retail investors and new institutional investors were also onboard last year's Reit train. Meanwhile the STI benchmark, with 30 constituents whose foundations span three centuries, delivered another 9 per cent dividend-inclusive return.