[SINGAPORE] Markets around the world are poised to end the first half of 2025 on a bullish note this week.
On Friday (Jun 27), the S&P 500, Stoxx Europe 600, Nikkei 225 and Hang Seng indices were in positive territory on a year-to-date basis, and as much as 29 per cent above the lows to which they slumped in April amid the “Liberation Day” sell-off.
This seems remarkable in light of the looming Jul 9 deadline for nations around the world to hammer out trade deals with the United States in order to escape its crippling “reciprocal tariffs”, not to mention the recent heightened turmoil in the Middle East.
There is a palpable sense of optimism in the Singapore market too. The Straits Times Index (STI) ended last week at 3,966.2, up 4.7 per cent since the beginning of the year, and 16.9 per cent above its Apr 9 low.
Underscoring the growing confidence in the market was a flurry of headlines last week about new listings on the Singapore Exchange (SGX). On Jun 23, interior fit-outs contractor Lum Chang Creations lodged a preliminary prospectus for a listing on Catalist.
The following day, on Jun 24, Hong Kong-listed China Medical System said it is proposing a secondary listing by way of introduction on the mainboard of SGX.
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Then, on Jun 27, a real estate investment trust backed by Japan’s Nippon Telegraph and Telephone lodged a preliminary listing prospectus. NTT DC Reit will have an initial portfolio of six data centres – four in the US, one in Austria and one in Singapore – worth approximately US$1.6 billion.
With a pipeline of “high conviction” potential acquisitions from its sponsor group, the Reit could double its size within five years. Among NTT DC Reit’s cornerstone investors is Singapore sovereign wealth fund GIC.
Another imminent new listing is Info-Tech Systems, which provides human resource management and accounting software to SMEs. The company deploys its software products via the cloud, under a “software as a service” model.
According to its Jun 27 prospectus, nearly 24.9 million shares will be sold to investors at S$0.87 each, comprising 5.6 million new shares and 19.2 million vendor shares. Including new shares sold to cornerstone investors, the company will rake in gross proceeds totalling S$28.7 million.
Info-Tech Systems is scheduled to begin trading SGX’s mainboard on Jul 4. At its initial public offering (IPO) price of S$0.87 per share, the company is valued at S$224.5 million, or 18.2 times its earnings for 2024 of S$12.3 million.
New listings, new hope
Companies are generally careful to come to market only when they can obtain a decent valuation of their shares. Indeed, candy maker YLF Group Marketing withdrew its plans to list on the Catalist board in April, in the wake of the Liberation Day sell-off.
YLF would have been only the second company to list in Singapore this year after parallel car importer Vin’s Holdings.
Yet, the arrival of prominent new listings may also help reinforce the currently positive market sentiment. For instance, NTT DC Reit could help draw global capital to the Singapore market, given its focus on a hot asset class and the stature of its sponsor group.
One could argue that GIC’s participation as a cornerstone investor is clear evidence of NTT DC Reit’s international relevance. After all, the equities market review group set up by the Monetary Authority of Singapore (MAS) said in February that it would not recommend GIC’s funds be used to boost trading liquidity on SGX.
“GIC’s mission is to preserve and enhance the international purchasing power of Singapore’s reserves,” said MAS deputy chairman Chee Hong Tat, who is also chairman of the review group.
Despite its much smaller size, Info-Tech Systems could also be a positive addition to the local bourse. With its technology flavour and solid profitability, it might well garner a stronger following among local investors than the last company to list on the mainboard – namely, 17Live Group.
The live-streaming platform operator listed in late 2023 by combining itself with Vertex Technology Acquisition Corp. At its Friday closing price, 17Live had a market capitalisation of just S$188 million – lower than the value at which Info-Tech Systems is coming to market this week.
A more vibrant IPO scene could also support value-unlocking initiatives in the corporate sector, and spur investor interest in the numerous asset-rich companies in the Singapore market with depressed share prices.
Back in November last year, Lum Chang Holdings couched the listing of its interior fit-outs business as a means of unlocking the value of the fast-growing unit. The group also mooted the possibility of a distribution-in-specie of some of its shares in the spun-out entity.
Lum Chang Creations’ preliminary prospectus showed its earnings for the six months to Dec 31 increased 61.6 per cent to S$5.3 million, on the back of a 16 per cent rise in revenue to S$40.8 million.
This past month alone, Lum Chang Holdings’ shares have rallied nearly 20 per cent. The stock closed last Friday at S$0.365 – still a 16.4 per cent discount to the group’s net asset value as at Dec 31 of S$0.437 per share.
Tariff impact looms
To be clear, I’m not suggesting that Lum Chang Creations, Info-Tech Systems, or even NTT DC Reit will deliver market-beating returns over time.
In fact, I am generally cautious when companies initially list, for fear they might have been more than fully valued at their IPOs.
Investors should probably also keep an eye on the shifting global macroeconomic picture. This column has previously suggested that lofty valuations in the US market and erratic policymaking by the Trump administration could drive global capital towards European and Asian markets.
Yet, protracted uncertainty surrounding the US trade tariffs may paralyse spending and investing decisions and weigh on global growth, which would probably be negative for markets everywhere.
On Jun 18, the US Federal Reserve’s summary of economic projections suggested a growing expectation of softer US growth and more stubborn inflation, as the effects of higher tariffs work their way through the system.
The median projection among participants at the recent Fed meeting is still for two 25-basis-point rate cuts in 2025; but seven of the 19 participants actually projected no rate cuts while two participants projected only a single cut.
Back in March, only four of the 19 participants were projecting no rate cuts, while a further four were projecting just one cut.
Fed chairman Jerome Powell said the uncertain outlook for the US economy was causing a divergence of projections, and that things would become clearer over time. “No one holds these rate paths with a great deal of conviction, and everyone would agree that they’re all going to be data dependent.”
Against this backdrop, investors in Singapore should not be complacent. While market sentiment has improved dramatically since April and the pace of new listings seems to be picking up, everything could still turn on a dime.
