New listings fire up the market, but lingering liquidity issues could douse the hype

[SINGAPORE] A rash of new listings on the Singapore Exchange (SGX) appears to be drawing interest from investors, as the Monetary Authority of Singapore’s equities market review boosts sentiment – particularly towards small and mid-cap companies.

In the third quarter of this year alone, there have been more initial public offerings (IPOs) than in the whole of 2024.

These include the debuts of pure-play data centre real estate investment trust (Reit) NTT DC Reit, urban revitalisation specialist Lum Chang Creations, design-and-build firm Dezign Format, commercial vehicle leasing firm Skylink, and purpose-built accommodation landlord Centurion Accommodation Reit.

But it is the IPOs from the tech sector – an area SGX has struggled to attract listings from – that could be particularly interesting to investors.

Human resources management software provider Info-Tech Systems made its mainboard debut in July, while metalens manufacturer MetaOptics started trading on the Catalist board this month. Also in September, SGX welcomed the secondary listing of cybersecurity player AvePoint, whose primary exchange is Nasdaq.

All three companies are currently trading above their listing prices.

As at market close on Wednesday (Sep 24), Info-Tech Systems was up 3.4 per cent from its IPO price of S$0.87 at S$0.90, while AvePoint rose 0.3 per cent from its listing price of S$19.50 to S$19.55.

Interestingly, it is the Catalist stock that is captivating investors. Three days after its debut on Sep 9 with a share price of S$0.20, MetaOptics surged to a high of S$0.75. While the counter has since come down to S$0.535 as at Wednesday’s close, that still represents a 167.5 per cent premium to the listing price.

These three IPOs could persuade venture capital investors to consider listing their tech portfolio companies here. While the US markets are much deeper, micro and small-cap listings from Singapore have struggled to perform well there.

Better sentiment, but turnover still low

Coupled with the ongoing equities market review, investors seem more upbeat about SGX in general.

But the trading volumes for these new tech stocks are low, with Wednesday’s turnover coming in at 169,300 securities for MetaOptics, 164,990 for AvePoint, and 152,700 for Info-Tech.

These levels pale in comparison to those of other SGX-listed companies, such as the ones that have been included in the new iEdge Singapore Next 50 Indices. For example, Boustead Singapore closed Wednesday with 453,900 shares transacted.

There are also constituents with far greater liquidity, such as iFast and Yangzijiang Financial, whose Wednesday turnover stood at 480,400 and 18.4 million securities, respectively.

Of course, these are still a far cry from what the constituents of the benchmark Straits Times Index typically experience. For instance, Singtel’s trading volume was 36.6 million shares on Wednesday.

To be fair to MetaOptics, its securities turnover peaked two days after its listing – at 7.6 million on Sep 11.

But the low trading volumes suggest that while investor interest has been piqued by these new listings, it has yet to translate into better liquidity in the market.

Nonetheless, SGX is gaining momentum from the potential of the equities market review. Earlier initiatives to attract listings, such as the Anchor Fund @ 65 by 65 Equity Partners, could also bear fruit.

But for the local bourse to continue attracting IPOs, it will need more liquidity and trading depth to sustain investor interest.

Of course, most of the initiatives aimed at revitalising the local equities market have not yet been fully implemented. In particular, the S$5 billion set aside for the Equity Market Development Programme has not been fully allocated. Only S$1.1 billion has been alloted to three fund managers so far.

Institutional money can help with liquidity, but interest from retail investors will be critical for the small and mid-cap companies. Without sufficient trading depth and liquidity, it would be a tall order to turn SGX into a preferred listing destination.