Singapore investors less sceptical of IPOs - for now

Singapore investors are more receptive to IPOs, even in the volatile technology sector, than their counterparts in other parts of Asia. That may not last, analysts say.

Singapore investors are more willing than their counterparts in Hong Kong and other parts of Asia to buy shares in the initial public offerings of internet and technology companies. But that is likely to change in the next few months as the stocks of newly listed companies fail to live up to expectations, analysts say.

Nearly 60 companies have launched IPOs in Singapore so far this year, raising some $2.5 billion. That is more than the 51 IPOs in the island-state in the whole of 1999. Offerings this week include Stratech Systems, an information technology company that is selling 66.8 million shares at S$1.10 each.

Other companies tapping the market are iSoftel, a telecommunications software and services company, which is offering 56 million shares at S$1.08; and SMRT Corp, Singapore's state-owned rail company, which is selling 492 million shares at S$0.61. Eworld of, a sporting goods retailer, that is selling 62.2 million shares at S$0.42.

"These latest offerings will probably be received fairly well, but the window of opportunity for other companies coming to the market is closing rapidly," says Nikunj Jinsi, managing director of AsiaTech Ventures, a Singapore venture capital company. "Investors in Singapore are less sceptical right now than they are in other parts of Asia, but I totally expect them to become more sceptical within the next month."

That's because the price of most of Singapore's IPOs have fallen below their issue price since the global sell-off in technology stocks beginning in April. "The way the underwriters are doing the issues now is highballing the range and then pricing at the lowest end, with the hope of getting a bounce on the first day of trading," says Jinsi.

It is a strategy that cannot last, he says. Investors only need to look at Hong Kong's Growth Enterprise Market to see the writing on the wall. The GEM index has fallen 55% since its inception in March. And  while companies still are selling shares, they are selling at substantially lower prices than they had originally hoped for.

For the first time, companies are offering shares at below HK$1, and even that's not always enough to give them a boost when trading begins. Panda-Recruit, an online job-hunting site, sold its shares for an all-time offer price low of HK$0.28 last week. Yet its shares plummeted 34% in their first day's trading.

"The problem of GEM is the lack of institutional buying and the lack of market makers," says Harry Lo, a partner at, a website that provides information on GEM stocks. "Investors in Hong Kong are not prepared to pay the kind of multiples they are willing to pay in Singapore."

Still, as Singapore IPO stocks continue to languish in the secondary market, investors will become more like their Hong Kong counterparts, Lo and others say. The countdown has just begun.

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