South-East Asia’s tech firms take a battering

Sea is not alone in its struggles. Grab, a Singaporean superapp offering deliveries, ride hailing, financial services and more, listed publicly in December. Its shares have since tumbled. Bukalapak, an Indonesian e-commerce firm which also listed last year, has seen its valuation drop by two-thirds over the past 12 months. GoTo, the Indonesian holding company that owns Gojek and Tokopedia after their merger in 2021, avoided the rout but its shares have languished in recent months.

Grab’s second-quarter results, due after The Economist is published, and GoTo’s, unveiled on August 30th could bring better news, but Sea’s recent experience shows that the three firms’ ambitious plans for payments and financial technology, which require big investments and many years to grow, do not suit impatient investors.

Amid the gloom there are some reasons for cheer. Emerging-market equity-fund allocations to the region have risen slightly this year, notes Steven Holden of Copley Fund Research, as fund managers have looked for alternatives to Russian equities. China’s crackdown on its tech companies also leaves investors looking for other places to park their money.

Beyond listed firms, venture-capital activity has slowed but not collapsed. Capital raised for funds focused on the region this year stood at $8.3bn on August 22nd, compared to $13.2bn for all of last year, according to Preqin, a data provider. The sum invested in vc deals this year runs to $10.7bn, already more than the total for all but two previous years—2018 and 2021. Sustained interest in smaller, private companies is good news for South-East Asia but does little for the pain of the larger listed ones. ■