7 days ago
South-east Asia's IPO market shows signs of revival after subdued H1
[SINGAPORE] Initial public offering (IPO) activity across South-east Asia remained subdued in the first half of 2025 amid ongoing geopolitical and macroeconomic uncertainty, but market observers say signs of recovery are emerging for H2.
The number of IPOs on major South-east Asian exchanges – in Indonesia, Malaysia, Singapore, Thailand, the Philippines and Vietnam – declined compared to the same period last year.
Based on a recent Deloitte report, 53 listings were recorded in H1 2025, down from 64 in H1 2024.
Ben Charoenwong, associate professor of finance at Insead, told The Business Times that the slowdown was driven not only by a reduced appetite to list but also by a widening valuation gap, fuelled by tariff uncertainty and global trade tensions.
He described South-east Asia's IPO activity in H1 2025 as 'a classic supply-demand mismatch story' – where companies that proceeded with listings often accepted significantly smaller capital raises and longer timelines than initially planned.
Prof Charoenwong said: 'Companies needed capital, but investors simply weren't willing to pay the prices that issuers expected. Yet, the private market has also dried up.'
A NEWSLETTER FOR YOU
Friday, 8.30 am Asean Business
Business insights centering on South-east Asia's fast-growing economies.
Sign Up
Sign Up
Still, signs of recovery are becoming evident.
Stephen Bates, partner and head of deal advisory at KPMG in Singapore, noted that while large IPOs remain rare, smaller sector-focused listings – particularly in technology, fintech and renewable energy – are gaining momentum.
He added that this rebound is supported by easing macroeconomic conditions and sector-specific growth drivers, such as the rapid expansion of tech and artificial intelligence (AI)-driven businesses, increased demand for renewables and infrastructure, and growing activity in consumer and healthcare sectors.
Tay Hwee Ling, transactions accounting support leader at Deloitte South-east Asia, said renewed investor confidence is also reflected in the uptick of IPO activity in the consumer and real estate sectors, alongside a gradual reopening of capital markets for larger issuers.
She pointed to a notable increase in sizeable mainboard IPO prospectuses lodged on South-east Asian bourses in June 2025 as an encouraging indicator. 'This signals positive market sentiments, and positions the region for a more vibrant second-half performance.'
Bates also observed that the region's regulatory reforms and government initiatives – including improved market transparency, streamlined listing processes, International Financial Reporting Standards adoption and tax incentives – have bolstered sentiment and helped attract new listings.
'Companies increasingly favour local exchanges over international ones due to regulatory support and growing domestic investor interest,' he said.
He added that strong foreign direct investment inflows into South-east Asia's digital and green sectors, amid supportive policies for IPOs in these areas, have further benefited the region.
'Cautious optimism'
This year, global markets have become notably more upbeat.
'Investor sentiment has shifted from caution in 2024 to cautious optimism in the first half of 2025,' said Bates.
Jimmy Seet, capital markets partner at PwC Singapore, observed that while macroeconomic fundamentals such as inflation and growth are showing signs of improvement, heightened geopolitical tensions continue to temper market enthusiasm.
'In this environment, investors are increasingly selective, gravitating towards high-quality issuers with proven profitability and operating in resilient sectors,' he added.
Prof Charoenwong highlighted that investor caution intensified, following US President Donald Trump's 'Liberation Day' tariffs on Apr 2.
He said: 'When US tariffs hit 145 per cent in April and regional indices dropped 10 per cent, we saw a complete freezing of IPO windows. And despite the US market recovering from that shock, the increased uncertainty also means that CFOs (chief financial officers) are holding off more, part of the option value of waiting to proceed with projects in the future.'
In contrast, Bates said that geopolitical tensions have actually boosted IPO activity, as investors increase exposure to the region amid global uncertainties.
Malaysia leads
Amid global market jitters, Malaysia's stock exchange outshone its regional peers with a surge in IPO activity.
According to the Deloitte report, the number of listings in Malaysia increased about 48 per cent year on year to 32, with proceeds raised increasing by some 109 per cent to US$940 million.
This was accompanied by an uptick in total IPO market capitalisation by about 165 per cent to US$4.04 billion, accounting for over two-thirds of total proceeds raised across the South-east Asian region.
Market watchers attributed this strong performance to regulatory reforms, including a faster IPO approval process.
Prof Charoenwong noted that Bursa Malaysia's new framework, which cuts approval timelines from six months to three months, enables companies to respond more swiftly to market conditions. The Leap Market Transfer Framework has further added agility, allowing firms to pivot across market segments without being stalled by lengthy procedures.
Seet also pointed to stabilising macroeconomic indicators, such as improved gross domestic product growth and moderating inflation, as additional drivers of market liquidity. These conditions made it easier for Malaysia to respond effectively to shifting global market conditions.
'When markets became volatile in March, Malaysian issuers could delay or accelerate based on conditions, while companies stuck in other jurisdictions' slower systems missed their windows entirely,' said Prof Charoenwong. He added that other government incentives further supported this agility.
For the opposite reason, another standout IPO market for Prof Charoenwong was Thailand.
'Instead of high-conviction government policies aimed at supporting a vibrant stock market, Thailand was hit with both an earthquake and the tariffs, amid an already slowing economy and further political turmoil,' he said.
On the Singapore Exchange (SGX), the IPO market has shown signs of renewed momentum. Seet attributed this to recent reforms in the listing framework and supportive initiatives by the Monetary Authority of Singapore, which have sparked increased interest in listing on the bourse.
'Although only one IPO was completed in H1 2025, the outlook for H2 is promising, with several offerings already announced,' he said.
The IPO of NTT DC Reit, for example, marks a notable milestone, given it is the first real estate investment trust listing on the SGX in nearly four years.
Looking ahead
IPOs are expected to perform better across South-east Asia in H2, supported by strong growth and key reforms, though risks persist.
'Ongoing regulatory reforms across the region are expected to sustain interest in new listings,' said Seet, adding that escalating trade tensions could pose headwinds to broader IPO activity.
Similarly, Bates noted that potential issuers will need to manage challenges arising from the uncertain geopolitical environment. 'New tariffs, the ongoing US-China trade decoupling and supply chain disruptions create IPO delays and valuation challenges.'
He explained that regional currency swings and shocks like the April 2025 sell-off make it harder to time listings and attract foreign investors. Varying regulations across Asean, global tax reforms and stricter listing standards also increase compliance burdens and preparation time.
Additionally, Bates sees the financial and operational demands of preparing for an IPO – including legal, accounting and management time – posing significant challenges, particularly for smaller firms in less developed markets.
Against this backdrop, Prof Charoenwong said companies that can tap into the AI-driven momentum in the US and Chinese markets stand to benefit, especially if positioned as diversification plays away from dominant incumbents.
In a related trend, Seet noted that the continued underperformance of and waning investor interest in China's A-shares market may prompt more Chinese companies to pursue offshore listings.
He believes SGX is well-positioned to capture this interest, given its reputation as an international capital-raising hub and a strategic gateway for Chinese firms seeking access to South-east Asian investors.
