The sharp falls in tech stocks of late may have shaken a few investors, but appetite for Singapore's old economy blue-chips remains weak. As such, it's unlikely the pipeline of planned offerings in the transport sector will start coming to market until the second half of this year.
The Singapore government had been expected to privatize both Port of Singapore Authority (PSA) and Singapore MRT (SMRT) in the first half of this year, while subsidiary Singapore Airlines (SIA) was aiming to obtain separate listings for its Singapore Airport Terminal Services (SATS) and the SIA Engineering Company (SIAEC) units no later than the beginning of the second quarter.
Market conditions have, however, not proved suitable as evidenced by SIA's share price having dropped to a low today of S$15.00 from S$20.80 at the start of the year.
Marc Julienne, head trader at SG Securities in Singapore, says new economy stocks remain the centre of attention despite recent volatility.
"I don't think we've completely shifted to an old economy focus," he says. "These counters coming to market are dull. You don't get more old economy than these."
"There was no appetite," says Kirsty Mactaggart, syndicate manager of Salomon Smith Barney's equity capital markets division. "There's been, so far, no non-tech deals priced this year."
"The markets have been volatile and weak, so to carry out a major cash-raising exercise would have been imprudent," says John Casey, transport analyst at SG Securities.
Investment banks have been pitching for the PSA privatization in recent weeks and the SIA spin-offs were handed to DBS and Merrill Lynch when plans for the separate listings were unveiled in late January.
Sources say DBS and Merrill Lynch have been trying to drum up investor interest in SATS and SIAEC in recent weeks, but the response so far has been weak. Mind you, SIA hardly needs the $1.0-1.4 billion expected proceeds from the spin-offs and can well afford to bide its time. Following the acquisition of a 49% stake in Virgin Atlantic Airways and recent share buybacks totalling almost S$1 billion ($584 million), SIA still has around S$2 billion in its coffers.
Like SIA, the Singapore government, which likes to get a full price for its assets, can afford to wait. Originally, it was expected the government would privatize SMRT first and then PSA. As a result of the delays, PSA now looks like being first to go under the hammer in order to avoid SMRT's listing clashing with the Hong Kong government's privatization of MTR Corporation, which is expected to come to market in June.
