Southeast Asia's IPO market fell drastically in the first half, but AI listings could revive it

Southeast Asia's IPO market declined significantly in the first six months of 2024, with market capitalization plunging 71% to $5.8 billion, a report from Deloitte showed.

The region saw only 67 initial public offerings in the first half, with that number falling by 21.2% compared to the same period a year ago. The amount raised from these IPOs dropped 53.3% year on year to $1.4 billion.

There were no blockbuster IPOs from January to June, with only one large IPO with market capitalization of more than $1 billion and raising more than $200 million, Deloitte said. In the same period a year ago, there were three large IPOs which raised more than $600 million each.

This marks a continued downward trend that began in the second half of 2022, according to Deloitte data.

The downward trend signals "subdued IPO market sentiments where investors and IPO candidates continue to navigate macroeconomic factors," Deloitte said.

Still, the report pointed out that historically, the latter half of the year "has always been the better performing half between 2020 to 2022."

"Despite a positive growth outlook and increasing foreign direct investment in Southeast Asia, the prolonged geopolitical instability and high interest rates environment have been the significant factors affecting the market conditions and investor sentiments in Southeast Asia," said Tay Hwee Ling, Deloitte's Southeast Asia accounting and reporting assurance leader.

High interest rates may persist in 2024 as governments address inflation concerns, Deloitte analysts warned.

Against this backdrop, investors geared toward "proven profitability and sustainable cash flows" instead of the growth-at-all-cost business model that many companies adopted from 2020 to 2022.

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