Three market wishes for 2023

AT THE start of a new year, it is customary to indulge in a spot of wishful thinking on the stock market – perhaps even more so this time given that 2022 proved to be a difficult year with prices under pressure because of sharply rising interest rates.

If a market wish list were drawn up for 2023, what might it contain? For the local market, a good starting point might be for Special Purpose Acquisition Companies (Spacs) to fulfil their promise by successfully “de-Spacing’’ via the injection or merger of suitably profitable target companies. There are three of these “blank cheque’’ companies listed here, all of which made their entry in January last year. After that flurry of activity and contrary to expectations of industry experts at the time that at least a dozen more would list in 2022, there have been no further developments on the Spac front.

While this lull is probably because of the uncertain market conditions brought on by rising interest rates and the weak economic backdrop, there is also the nagging worry that perhaps the best days for Spacs may have passed. According to an EY study released last October, the number of Spacs that went public worldwide plummeted by 80 per cent compared to the previous year while the amount raised was just US$11.8 billion – down 88 per cent compared to 2021. The study noted that redeeming Spac shares skyrocketed in 2022, making mergers more challenging to complete and posing a liquidity issue for newly listed companies. Notwithstanding these signs, it is nonetheless accurate to say that Spacs, which raise money from the public before finding a suitable business, still present a viable investment option that offers a useful and novel alternative to the traditional initial public offer (IPO) route to a listing. Hopefully, the three locally-listed Spacs will deliver in 2023.