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The variety of firms listed on Singapore’s inventory change has hit a two-decade low after simply 4 firms went public this yr and a number of other delisted, with the city-state’s regulator investigating how one can halt the fairness market’s slide.
The variety of firms on the Singapore Exchange fell to 617 in October, the bottom since September 2004. The determine has been in regular decline since hitting a excessive of 782 in 2013, with home firms drawn to abroad listings, particularly in bigger and extra closely traded markets such because the US.
“I certainly hope that this yr is a low level,” mentioned Clifford Lee, head of the funding financial institution at DBS, south-east Asia’s greatest lender and Singapore’s most precious public firm. “It’s a results of numerous components coming collectively.”
Shein, the Chinese language fast-fashion enterprise based mostly in Singapore since 2022, is considering a London listing with a possible £50bn market valuation, which might make it one of many UK’s largest public firms. A number of of Singapore’s best-known companies, together with superapp Seize and ecommerce group Sea, have opted for New York listings in recent times.
Singapore has benefited from a flood of personal capital flowing into the city-state, which has coincided with a burgeoning household workplace sector, whereas the SGX has additionally constructed up sturdy bond buying and selling, derivatives and actual property funding belief markets. Nevertheless it has struggled to repeat that progress with initial public offerings.
Over the summer time, the Financial Authority of Singapore launched a evaluation of the nation’s fairness markets, with a panel that included the heads of the SGX, financial authority and Temasek, the state-owned funding firm.
The group is because of report its findings subsequent August and has to date mentioned methods of attracting extra fund managers to put money into the inventory market in an effort to deal with demand points, whereas stress-free some disclosure guidelines and investor safeguards to encourage extra firms to checklist, in line with an individual concerned within the talks.
“It’s a hen and an egg scenario,” the individual mentioned. “We have now to make it enticing for good firms to checklist and see extra fund managers available in the market, and they’ll solely be attracted by the prospect of investing in good firms.”
The regulator mentioned in a press release: “Many concepts have been surfaced because the evaluation group is participating broadly with many teams of stakeholders and the evaluation group discussions are nonetheless ongoing.”
A number of funding bankers advised the Monetary Occasions that 2024 was more likely to be the nadir for listings in Singapore as a result of political uncertainty of normal elections around the globe. They mentioned there was pent-up demand, and so they have been engaged on a number of IPOs for subsequent yr.
The 4 firms that went public with a main itemizing on the SGX this yr — all of which have been on the junior Catalist market — had a mixed IPO worth of simply $31mn and included a series of karaoke bars and an operator of Japanese eating places.
The most important firm to checklist, the Singapore Institute of Superior Medication healthcare group, has shed 71 per cent of its market worth since its March IPO after reporting heavy losses. Its auditor, PwC, raised questions on its capacity to proceed as a going concern over the summer time.
Inventory markets around the globe — notably London — have struggled to draw listings within the face of fierce competitors and excessive valuations within the US. The quantity raised by means of IPOs throughout south-east Asia this yr is the bottom in at the very least 10 years, in line with Dealogic.
Even so, Malaysia has had 46 IPOs this yr, in contrast with 39 in Indonesia and 28 in Thailand. Whereas the Philippines had simply three listings, their complete worth of $197mn far outpaced Singapore’s $31mn.
Many of the firms that listed in different south-east Asian markets have been home, whereas Singapore is positioning itself as a world hub for worldwide public firms.
“The strategic infrastructure is right here, the liquidity accessible available in the market to put money into new listings is right here,” mentioned DBS’s Lee, who’s concerned within the MAS evaluation. “Now we want provide of firms selecting to checklist. We have now a wholesome pipeline for the yr forward. It’s like a well-oiled, glossy machine that hasn’t been used.”
One choice often mooted is whether or not to permit Singapore’s obligatory financial savings system — the Central Provident Fund, sometimes used to finance retirement, healthcare and property purchases — to take a position extra within the home inventory market.
“That might create new swimming pools of cash to assist drive up multiples and would most likely spark IPOs,” mentioned Jayden Vantarakis, head of south-east Asian equities analysis at Macquarie, who covers the SGX.
However he doubts that such reforms will materialise and downgraded the SGX from “outperform” to “impartial” in November, partly on expectations that the MAS evaluation would fail to stop the decline in listings.
Further reporting by Haohsiang Ko in Hong Kong
