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SINGAPORE'S total domestic market capitalisation has grown the most slowly among major regional bourses so far this year, but the local bourse came out ahead of its South-east Asian counterparts in initial public offer (IPO) fundraising, figures compiled last week by The Business Times indicate.
Its liquidity, measured in share turnover velocity, ranked in the middle among the six exchanges that were examined. Turnover velocity on the Singapore Exchange (SGX) surpassed that of the Philippines and was roughly on par with Malaysia and Indonesia, but lost out to Hong Kong and Thailand.
The outlook for the local market's growth next year remains cloudy, market watchers said, adding that Singapore continues to be dwarfed by Hong Kong; Thailand has begun nipping at its heels.
On the basis of market-value growth, the SGX's showing was among the region's worst, going by the latest data from the World Federation of Exchanges (WFE) website.
The total market value of companies listed here was US$655.71 billion as at the end of October, a relatively small 2.5 per cent increase over the US$639.96 billion as at the end of December 2015.
This was the smallest percentage change out of the six bourses in United States dollar (USD) terms, followed by Bursa Malaysia's 2.7 per cent and then Hong Kong's 2.9 per cent growth.
Switching to local currency terms, though, the Singapore market's total expansion in value came in at 0.8 per cent over the 10 months to October, marginally higher than Bursa Malaysia's 0.4 per cent growth - the lowest among the six exchanges - over the same period.
Indonesia and Thailand's exchanges grew far more rapidly, notching up double-digit growth in market value both in US dollar and local currency terms. Indonesia's domestic market capitalisation surged 27.9 per cent; Thailand's climbed 22.5 per cent in US dollar terms, and the Philippines' rose 7.3 per cent.
Kum Soek Ching, head of South-east Asia research in private banking research at Swiss bank Credit Suisse, said: "I would attribute the lethargic growth in Singapore's market cap to the flat performance of the local market this year.
"In contrast, the Indonesian and Thai stock markets went up by 16 per cent and 18 per cent in USD terms respectively this year. Privatisations or M&As (mergers and acquisitions) of 18 companies, including SMRT, NOL ... and OSIM also did not help our case.
"Without visibility to the IPO pipeline, it's hard to assess the market-cap growth potential of the markets from this perspective; but in the absence of a re-rating, the market's low valuation could attract more privatisations or buyouts of the listed sector. There is also less incentive for big companies to list here if turnover and valuations continue to stay low."
Ernest Kan, deputy managing partner for markets at consultancy Deloitte Singapore, said Thailand has been catching up. In fact, Deloitte's data shows that the SGX's performance from 2014 to 2016 was "second to Thailand in terms of both funds raised and market capitalisation".
WFE data showed Thailand's domestic market cap was about US$427.2 billion at the end of October, roughly two-thirds of Singapore's.
The outlook for Singapore's domestic market capitalisation is uncertain, he said, adding that the country's real gross domestic product growth forecast in 2017 is expected to lag behind the global, Asian and Asean forecasts; he noted that the Monetary Authority of Singapore had projected in its October macroeconomic review that Singapore's economy and trade-related sectors will continue to struggle.
On the IPO front, Singapore's total IPO fundraising year-to-date was soundly surpassed by Hong Kong's. Offer sizes on the local stock market for companies that made their public trading debut this year summed up to US$1.66 billion, said Bloomberg.
Hong Kong easily eclipsed that, with total offer sizes coming up to US$19.37 billion; Thailand was right behind Singapore with US$1.43 billion.
The local market has so far had 16 IPOs this year, mostly of small Catalist stocks. Ms Kum noted that three real-estate investmen trusts (Reits) - Manulife US Reit, Frasers Logistics & Industrial Trust and EC World - accounted for more than 80 per cent of the year-to-date IPO proceeds.
Dr Kan said Singapore faces competition for IPOs from Thailand, Indonesia and Malaysia, where exchanges have ramped up efforts to attract new floats.
However, although Singapore's 2014 to 2016 IPO count of 58 new listings was lower than some of its South-east Asian peers such as Vietnam (145 IPOs) and Thailand (100 IPOs), Singapore has a "much higher" proportion of funds raised due to larger deal sizes, which still signals greater investor confidence and reasonable liquidity in Singapore, he said.
Liquidity, the third key measure of stock market performances, has been so far been fairly decent for Singapore this year, going by WFE figures on share turnover velocity. The metric was computed by taking the ratio of domestic share turnover to month-end domestic market cap then multiplying by 12 for an annualised figure.
Share turnover velocity came in at a monthly average of 31.8 per cent for Singapore in the first 10 months of the year. This was outstripped by Hong Kong (41.8 per cent) and the Stock Exchange of Thailand (81.7 per cent), but Singapore still did better than the remaining three markets. Malaysia's was 27.2 per cent, Indonesia's was 22 per cent and the Philippines', 14.7 per cent.
In the local market year-to-date, turnover velocity was highest in January, after the US Federal Reserve raised interest rates in December last year.
Interest in equities was high at the start of the year after the local bourse took a dip alongside China's stock market plunge, IG market strategist Pan Jingyi said via e-mail. "Strong sell-offs were seen as prices sustained in decline while others looked for opportunities to enter the market ... the higher turnover velocity can also be attributed in part to the drop in market cap at the start of the year."