THE FINANCIAL SECTOR:
PERFORMANCE AND GROWTH
     
Content Page
Modest Recovery in 2003
Financial Market Activity
 
FINANCIAL MARKET ACTIVITY
 
.
.
Rise in Asian Dollar Market Lending . Box 12 – A Robust Financial System
.
.
Healthy Growth in Corporate Debt Market . Active Trading in Equities and Futures Market
.
.
Vibrant Treasury Market . Box 13 – The Singapore IPO Market
.
.
Mixed Performance for Insurance . Box 14 – Bank Loans to HDB Flat Buyers
 
Box 13
THE SINGAPORE IPO MARKET
 
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.
 
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.