The IPO market in Southeast Asia experienced a significant decline in the first half, but listings related to artificial intelligence could potentially revive it.

• According to a Deloitte report, the number of listings decreased by 21.2% year on year to 67, while the amount raised from these IPOs decreased by 53.3% year on year to $1.4 billion.
• Indonesia saw the most pronounced drop among all Southeast Asian countries.
• Deloitte's Southeast Asia accounting & reporting assurance leader, Tay Hwee Ling, stated that although Southeast Asia's IPO market may seem quiet in 2024, there is optimism that conditions will improve beyond that year.

Deloitte's report revealed that Southeast Asia's IPO market experienced a significant decline in the first six months of 2024, with market capitalization plummeting 71% to $5.8 billion.

In the first half, the region experienced a 21.2% decline in the number of initial public offerings compared to the same period last year, resulting in only 67 IPOs. Additionally, the amount of money raised from these IPOs decreased by 53.3% year over year to $1.4 billion.

In the first half of 2021, there was only one large IPO with a market capitalization of over $1 billion and raising more than $200 million, according to Deloitte. In contrast, in the same period a year ago, there were three large IPOs that raised more than $600 million each.

According to Deloitte data, the trend of decline began in the second half of 2022 and has continued.

Deloitte stated that the subdued IPO market sentiments are due to investors and IPO candidates continuing to navigate macroeconomic factors.

Historically, the latter half of the year has consistently been the better performing half from 2020 to 2022.

Although there is a positive growth outlook and an increase in foreign direct investment in Southeast Asia, the prolonged geopolitical instability and high interest rates environment have significantly impacted the market conditions and investor sentiments in the region, according to Tay Hwee Ling, Deloitte's Southeast Asia accounting and reporting assurance leader.

Deloitte analysts warned that high interest rates may continue in 2024 due to governments' efforts to address inflation concerns.

Instead of prioritizing growth at all costs, investors now focus on "proven profitability and sustainable cash flows."

IPO fundraising in Indonesia plunges

Among all Southeast Asian countries, Indonesia experienced the most significant decline.

Deloitte's analysts stated that Indonesia, which led the 2023 Southeast Asia IPO rankings, experienced a significant decline in the first half of 2024 due to a wait-and-see approach adopted by investors and IPO aspirants in anticipation of the presidential elections in February 2024 and the new economic policies that were expected to be implemented.

The market capitalization of Indonesian listings decreased by 92.2% from $1.22 billion in January to June, while IPO proceeds fell by 89.1% compared to the previous year. Additionally, the number of Indonesian listings decreased by 43.2% from 44 in the first six months of last year to 25 in the same period this year.

Despite Southeast Asia's IPO market appearing subdued in 2024, there is optimism that conditions will improve beyond that year, according to Tay.

Anticipation of lower interest rates may lead to the return of REIT listings, while AI-related IPOs could soon hit the market as many AI companies are still in their early stages.

In the near future, there will likely be a substantial influx of AI IPOs, which will introduce novelty and possibilities to the market, according to Tay.