IPOs should continue to flow into the Asian markets despite the current weakness.
Analysts said the Singapore and Hong Kong equity markets should not be pitted against each other as each has its own strength that should attract foreign companies looking to go public.
Hong Kong’s proximity to China makes it a strategic location for firms with ambitions of expanding into the buoyant Chinese consumer market.
Singapore, meanwhile, can bank on its strength as a hub for property trusts.
Wong Sui Jau, general manager, Fundsupermart, said: “They will choose those which are nearer to their home market. Because so many companies see China as a huge potential market, then generally it makes sense for them to list over there (Hong Kong).
“Having said that, Singapore – we’ve seen as a headquarters hub – and as I have said, REITs have become popular here in Singapore. So yes it’s one particular area Singapore continues to excel (in).”
Analysts said IPOs’ poor showing in Hong Kong and a plunge in the prices of their Singaporean peers should just be temporary.
Investor sentiment is hurt by worries about a Greek default and China’s hard landing, rather than concerns over the companies’ earnings prospects, they said.
The depressed equity markets had prompted big consumer brands to price their IPOs at the bottom end of the price range they had hoped for. For example, Prada had priced its IPO at HK$39.50 a share, which was at the bottom of the price guidance of HK$39.50-HK$42.25 apiece.
High-profile IPOs in Singapore were also not spared, having seen their shares plunge by more than 10 per cent from their IPO price. Stocks like Perennial China Retail Trust dropped by nearly 14 per cent from its IPO price of 70 cents.
Analysts said in this kind of market, companies with plans to go public could still give it a go.
Reports said Chinese hypermart operator Sun Art Retail has received regulatory approval to launch its IPO. Meanwhile, Chinese shoe retailer Hongguo International plans to raise up to US$300 million in an IPO in the third quarter.
Roger Tan, head of research, SIAS Research, said: “There is an issue of digesting new shares coming out in the market. Even for the old listings, unless they show they’re doing better than what they’ve promised investors upon listing, their share prices aren’t going to go upwards.
“You must have a unique selling point or unique returns to give to investors when you discount markets.”