| Box
13 |
| THE
SINGAPORE IPO MARKET |
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| Initial Public
Offer (IPO) market activity in Singapore picked up in
mid 2003 after SARS was brought under control in Asia.
The number of new listings rose 83% to 55 in 2003 but
the amount raised rose by a smaller magnitude of 13% to
S$1.7 billion in 2003 (See Chart 11). In addition, IPOs
listed in 2003 registered higher relative returns versus
their peers listed in 2000 to 2002 (See Chart 12). The
higher returns could be a result of an improved economic
outlook, the stock market rally and conservative pricing
of IPO shares. Demand for IPO shares soared as the average
subscription level for IPO public tranches jumped from
24 times in 2001 to 167 times in 2003. |
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While the
IPOs in 2000 largely comprised of local companies, the
IPOs in 2003 included both local and foreign IPOs, a majority
of which were from China. The number of Chinese IPOs rose
from zero in 2002 to 15 in 2003 (See Chart 13). They were
mainly manufacturers from a number of different industries,
including electronics, plastic and metal products industries.
The amounts raised by these IPOs were not significantly
different from that of the average IPO. The IPO market
relative to the overall Singapore stock market moreover
remains small, with the 55 IPOs listed in 2003 constituting
only 1.3% of the SGX market capitalisation.
Foreign-based IPOs have contributed significantly to the
IPO market but investors need to be aware of the risks
involved. There is limited recourse in the event of fraud
with regards to foreignbased IPOs. It may also be harder
to conduct investigations of any wrongdoings committed
at the foreign subsidiaries. Coverage of and information
on foreign-based IPOs may also be more limited because
of the geographic distance. |
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