Geopolitical instability struck capital markets in South and Southeast Asia in the first half of 2026. But after a rocky start to the year, markets in both regions appear to be coming back in business, albeit on a more discerning basis and pace.
The disruption to oil and gas shipped through the Strait of Hormuz has had an outsized impact on Southeast Asia, which relies on the Gulf for around half of its crude oil supply and a third of its gas imports.
In some countries, gasoline prices more than doubled immediately following the onset of the conflict in the Middle East, while others introduced energy rationing to mitigate supply-chain shocks. Higher energy costs have had a direct impact on inflation and interest rates, suppressing consumer spending and growth.
Holding firm
In the face of myriad international and domestic headwinds, Southeast Asia’s equity and debt capital markets have demonstrated resilience.
IPO issuance in Southeast Asia showed year-on-year growth in the first half of 2026, as issuers secured proceeds of US$3.07 billion from 47 flotations to achieve an aggregate market capitalization of US$15.07 billion, according to Deloitte. Compared to the same period last year, 53 IPOs generated proceeds of US$1.41 billion and an aggregate market cap of US$7.7 billion.
The successful 2026 public offerings of UI Boustead REIT in Singapore, Sunway Healthcare Holdings Berhad in Malaysia and Dien May Xanh Investment Joint Stock in Vietnam have demonstrated pockets of regional durability in the face of global shocks.
In India, which has enjoyed two years of unprecedented IPO activity, year-on-year issuance was more subdued through the first six months of 2026. IPO proceeds only reached around US$3.5 billion in the first half of 2026, far behind the levels achieved in each of the past two years, when annual proceeds exceeded US$20 billion. India is a net energy importer, making it more susceptible to global volatility and rising energy prices. In conjunction with a tepid equity market performance, investors opted to step back and take stock due to subpar earnings growth and limited exposure to the AI boom in Indian stock markets.
However, the Indian market is poised for a busy second half of the year. July saw the US$1 billion IPO of SBI Funds Management, India’s second-largest asset manager, in the biggest listing of the year so far. Thereafter in August, Manipal Health Enterprises completed its US$975 million IPO and rose sharply in its market debut. Other jumbo listings are in the cards too, according to Bloomberg, including National Stock Exchange of India and Jio Platforms.
Debt capital markets choppier, but outlook positive
Throughout the broader region, debt capital markets weakened in H1, but prospects for the latter half of 2026 are more upbeat.
In South Asia, year-on-year issuance of high yield bonds, leveraged loans and non-leveraged loans combined fell by 38.7% to US$10.6 billion in the first half of 2026. In Southeast Asia, issuance declined by 24% to US$32.9 billion over the same period.
Credit markets, however, have proved more stable than headline declines in debt issuance might suggest. Analysis from several market sources suggests that many borrowers have buffers in place to absorb market turbulence, with anticipated forecasted default rates to be the lowest level in five years.
Ready for launch
Though global volatility will remain a key near-term concern for investors, founders and issuers, there is nevertheless an underlying willingness to come to market, provided valuations and investor demand align.
In volatile markets, timing IPOs and debt launches to take advantage of tight issuance windows will always be a strategic priority for issuers. Capital flows are also expected to skew toward established issuers in debt capital markets, and high-quality names in equity markets.
Jurisdictions, meanwhile, are working hard to make their capital markets regimes as supportive as possible of capital formation and enhanced liquidity.
For example, the Securities and Exchange Board of India (SEBI) has granted a one-time extension for approved public offers that have been deferred because of market uncertainty. Under normal circumstances, SEBI requires companies to launch their offerings within 12 months after receiving regulatory clearance but extended the timeframe for issuers who faced expiring approval to the end of September.
Indian issuers are also benefiting from the growth and success of the Gujarat International Finance Tec-City (GIFT City), where the International Financial Services Centre has been established. GIFT City—a special economic zone—has enabled Indian companies to borrow in US dollars, issue foreign bonds, manage their treasury functions, and set up investment funds without having to conduct these activities in offshore financial centers.
In Southeast Asia, the Singapore Stock Exchange (SGX), in conjunction with New York’s Nasdaq, recently launched the Global Listing Board, to support listings and fundraisings in Singapore and the US. The Global Listing Board aims to attract issuers with an Asian nexus and a market capitalization of at least SGD2 billion (around US$1.6 billion) to dual list on the Nasdaq Global Select Market and SGX. By streamlining dual listings and facilitating regulatory compliance, this platform is expected to help Asian growth companies broaden their investor base across global markets.
Singapore is also pursuing other reforms to stimulate its equity capital markets. As announced by Prime Minister Lawrence Wong in his Budget speech in February, the Monetary Authority of Singapore will expand its Equity Market Development Programme (EMDP), which launched in July 2025, from SGD5 billion to SGD6.5 billion. The EMDP has attracted strong interest from asset managers, with several already appointed to oversee investments in the national stock market.
Indonesia, meanwhile, has also taken steps to make its stock market regulatory framework more attractive to global investors. The Indonesia Stock Exchange intends to double the free float requirements of listed companies and increase its shareholder public disclosure requirements to improve ownership transparency and liquidity.
Equity and debt capital markets across South and Southeast Asia are working hard to strengthen the foundations to support new capital raisings. With market initiatives and regulatory frameworks in place, the principal catalyst now appears to be greater geopolitical stability to unlock the region’s issuance pipeline and translate market preparedness into sustained deal activity.