NTT DC REIT’s IPO was supposed to be a shot in the arm for Singapore’s flagging equity market, decried by analysts as “lackluster” due to its lack of growth stocks and tiny number of listings. NTT’s IPO had everything: It was oversubscribed, boasted sovereign wealth fund GIC as a cornerstone investor, and was tied to the buzzy data center sector.
Yet NTT DC REIT’s shares have done poorly since their trading debut on Monday, falling below the offer price of $1.
Hong Kong’s benchmark Hang Seng Index is up by almost 25% so far this year, while Singapore’s Straits Times Index is up by just 9%.
“Singapore’s lack of growth oriented, tech representation in the STI has led it to trail the Hang Seng. This has led to descriptions of the market as lackluster,” Thilan Wickramasinghe, Singapore head of research at Maybank Investment Banking Group, says.
Singapore has had just three IPOs so far this year, including a July 14 listing from NTT DC REIT, whose shares started trading on Monday. Hong Kong, by comparison, has had more than 40 IPOs.
NTT DC REIT, backed by Japanese telecoms giant Nippon Telegraph and Telephone, raised $773 million in its IPO, making it Singapore’s largest listing in eight years. By comparison, Hong Kong’s largest IPO this year was battery giant CATL’s secondary listing in late May, which raised at least $4 billion.
The NTT DC REIT IPO was meant to give investors a way to tap into AI-fueled demand for data centers, and give Singapore’s equity market a much needed boost. Instead, it may end up showing just how much work still needs to be done.
NTT DC Reit’s listing
NTT DC REIT consists of six data centers. Four are based in the U.S., with one in Northern Virginia—the world’s largest data center market—and three in Northern California. One data center is in Vienna, a fast-growing data center market. The last is in Singapore, the second-largest data center market in Asia-Pacific after China.
Data centers are key to running AI applications. These specialized data centers provide the computational power and digital data storage capacity that’s needed to train the ever increasingly complex AI applications. AI applications, like large language models, rely on massive amounts of data for training and operation.
Singapore has long been a regional data center hub due to its infrastructure, lack of natural disasters, and its position as a key node for subsea cables.
Generative AI requires massive amounts of computing power, both for training and inference, which in turn has sparked a boom in data center investment. NTT hopes to capture that need for data center capacity, using the proceeds from its listing to continue growing its data center business. The company plans to develop over 850MW of capacity across the Americas, Europe, the Middle East, Africa and Asia.
NTT estimates that total annual cloud and AI revenues are projected to grow at a compound annual growth rate of about 23% between 2024 and 2027, driven by AI-led demand.
Asia-Pacific attracted $15.5 billion in data center investments last year, more than any other region in the world according to the real estate consultancy Knight Frank.
The consultancy forecasts global capital expenditure to exceed $286 billion by 2027 as operators respond to mounting demand for AI-optimized infrastructure, cloud services, and enterprise digital initiatives.
Singapore’s equity market
Doug Adams, CEO for NTT Global Data Centers, explained that the company picked Singapore due to its appreciation for data centers.
“The Singapore market is a great market for data centers in general, and we believe the best market in the world for data center Reits,” Adams said in an interview on CNBC International on Monday. “In Singapore, they appreciate a global set of assets and they look for a drip feed of assets over time, which is what we’re looking to achieve for our portfolio.”
GIC, Singapore’s sovereign wealth fund, is one of the IPO’s cornerstone investors. GIC has a 9.8% stake in NTT DC REIT, making it the second largest investor after NTT.
Singapore is trying to lift the fortunes of its stock exchange, including a 20% tax rebate for primary listings.
The country’s stock market is often criticized as boring or illiquid, with the sectors like property, conglomerates and the three big local banks dominating the SGX. Poor liquidity weakens investor sentiment, which then leads to lower valuations or even fewer listings.
While Singapore’s exchange struggles, Hong Kong’s is surging, which Wickramasinghe credits to the “DeepSeek moment” and Beijing’s pro-growth stance.
Lorraine Tan, director of equity research for Asia at Morningstar, notes that Hong Kong’s market is also rebounding from years of poor performance, making the market “relatively cheap in valuation terms.” She adds that the surge in Hong Kong IPOs could also be due to Chinese regulators giving their approval for mainland companies to list in Hong Kong.
Recent blockbuster IPOs in Hong Kong include home appliance maker Midea Group, ice cream giant Mixue, and insurer FWD Group. Other giants like automaker Chery, AI startup Minimax, Malaysian aviation firm Capital A and fast fashion platform Shein are reportedly considering Hong Kong IPOs.
Hong Kong is now set to be the world’s top IPO destination this year, according to S&P Global Market Intelligence Data.
Still, Wickramasinghe is optimistic that Singapore’s policy reforms should help the market “shed its lackluster image going forward.”
“The recent listing of NTT DC Reit is an early signal of returning listings. We expect this momentum to accelerate going into H2,” Wickramasinghe says.
