Vietnam has seen a reduction in IPO activities primarily due to stricter regulations on listing approvals and a significant net outflow of foreign investments, influenced by both global and local market liquidity challenges. This, along with the decline in the VN-index since mid-2022, has led many companies to postpone their public offerings until more favorable conditions emerge. “Vietnam’s stock market indices have shown some recovery as the year closes, but they still lag behind the highs of 2021 and early 2022. To counteract this, the government has been proactive in stimulating the economy and enhancing the stock market’s stature to rebuild investor trust,” commented Bui Van Trinh from Deloitte Vietnam.
In contrast to Vietnam’s market, Southeast Asia as a whole reported a robust 153 IPOs during the same timeframe. Yet, the funds raised were at an eight-year low. By November 15, the region had garnered around $5.5 billion from IPOs in the current year, a decrease from the $7.6 billion raised through 163 IPOs in the entirety of 2022.
Deloitte notes that Southeast Asian companies are showing resilience and are increasingly considering cross-border IPOs, lured by the prospects of better valuations, improved liquidity, sector-specific investor interest, and familiarity. Global stock exchanges are taking note and are either introducing new measures or enhancing existing ones to attract these dynamic enterprises.
An emerging pattern is the growing number of companies opting for listings on secondary boards within Southeast Asian exchanges. These junior boards, designed for small to medium-sized high-growth enterprises, often serve as a stepping stone to the Main Board. Achieving listed status can be instrumental for these companies in terms of expansion and subsequent capital raises.
The region is home to many SMEs with strong growth potential, and a supportive financial ecosystem is crucial for these companies to flourish and fully realize their growth possibilities.
Looking ahead to 2024, Tay Hwee Ling of Deloitte Southeast Asia and Singapore remarked, “In the midst of a tough macroeconomic landscape, stock exchanges are adapting to the trend of Southeast Asian firms seeking listings in larger foreign markets for greater capital and investor bases, or for more favorable valuations. For a number of these companies, the US market is particularly appealing due to its depth of investors and liquidity.”