SINGAPORE: Investors have shrugged off their sub-prime phobias and are rolling out the red carpet for initial public offerings (IPOs) again.

There have been two dazzling listings on the Singapore Exchange (SGX) in the past fortnight--Sinostar and Fuxing--with plenty more to come.

It follows a dry first half in September, when firms delayed IPO plans after investors got cold feet about taking up placement shares.

But sentiment has undergone a sea change since then--the Straits Times Index is up more than 900 points from its August intra-day low--and both new listings in Singapore cashed in.

To date, Chinese petrochemical group Sinostar has surged an eye-popping 150%, while zipper maker Fuxing, also based in China, has risen 44.6%.

The contrast with August is stark. Then, eight of the nine newbies fell below their IPO prices soon after listing, as concerns over sub-prime mortgages in the United States spooked financial markets worldwide.

Phillip Securities managing director Loh Hoon Sun said the decision by the US Federal Reserve last month to cut interest rates has lifted the air of gloom. "It gave a very big boost to investors' confidence. And this has drawn back the investors who have been holding back on taking up IPO shares."

IPO candidates are now lining up like taxis outside Lucky Plaza. Eight firms recently lodged preliminary IPO prospectuses, including real estate fund firm ARA Asset Management and Marco Polo Marine.

This is in addition to two firms that have already launched IPOs. Mermaid Maritime's offer closed yesterday (11 Oct), while China Oilfield Technology Services Group's issue is open for subscription until Monday (15 Oct).

And the red-carpet roll-out extends to real estate investment trust and business trusts.

Saizen Reit, which specialises in Japanese residential properties, may be launched as early as next week.

And Hyflux said yesterday that it is sponsoring a business trust that will have assets such as water treatment plants in China. It will be listed on the SGX later this year.

But while market experts welcome the strong comeback for IPOs, some are concerned that the flow of new listings will dwindle.

One dealer observed that the current deluge was more of a case of bankers clearing up their unfinished deals for the year.

It may also become more difficult to find IPO gems like shipyard firm Yangzijiang, as China has not resumed giving the green light to mainland firms planning to list in overseas bourses such as SGX, after pulling the rug last year.

This is giving merchant bankers the jitters, as they have relied on China firms for the bulk of their business.

"Very few investors understand the Indian market, which explains why there are so few Indian firms listed on SGX," said a corporate lawyer.

"And Japanese firms like Saizen will merely give the local bourse a more international flavour; they don't have the same sexy appeal like Yangzijiang."

This could widen the gap between SGX and the Hong Kong Exchange, which is enjoying its own IPO boom with shares of firms such as China nickel producer Xinjiang Xinxin Mining and motor trader Dah Chong Hong selling like hot cakes on their debut.

But Kevin Scully, managing director of boutique finance outfit NRA Capital, is hopeful: "There are more deals from South and South- east Asia recently. A lot of people are looking at Indonesia as the next hot spot for IPOs, if China dries up." (By GOH ENG YEOW/ The Straits Times/ ANN)