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The number of companies listed on Singapore’s stock exchange is at its lowest in 20 years, after just four companies went public this year and several companies were delisted. Singapore regulators are investigating ways to stop the stock market’s decline.
The number of companies listed on the Singapore Exchange fell to 617 in October, the lowest level since September 2004. This number has been steadily decreasing since hitting a high of 782 companies in 2013, with domestic companies increasingly attracted to overseas listings, especially larger and larger listed companies. Trading markets such as the United States.
“We hope this year is the bottom,” said Clifford Lee, head of investment banking at DBS, Southeast Asia’s largest financial institution and Singapore’s most valuable public company. “It’s the result of a combination of factors.”
Shein, the Chinese fast fashion company based in Singapore from 2022, is considering a London listing with a potential market valuation of £50bn, which would make it one of the UK’s largest listed companies. Some of Singapore’s best-known companies, including super app Grab and e-commerce group Sea, have opted to list in New York in recent years.
Singapore has benefited from a flood of private capital flowing into the city-state, coinciding with the rapid growth of the family office sector, while SGX has also built a strong bond trading, derivatives and real estate investment trust market. But it has struggled to repeat that growth with initial public offerings.
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Over the summer, the Monetary Authority of Singapore launched a review of the country’s stock market, with a committee including the heads of SGX, financial authorities and state-run investment firm Temasek.
The group plans to report its findings next August and has so far discussed how to attract more fund managers to invest in the stock market to address demand issues, while also encouraging more companies to invest in the stock market. The company has reportedly been considering relaxing some disclosure rules and investor protection measures to encourage listings. to those involved in the negotiations.
“It’s a chicken and egg situation,” the person said. “We have to make it attractive for good companies to list on the market and see more fund managers, who are not only attracted by the prospect of investing in good companies. Sho.”
“Due to the review group’s extensive engagement with many stakeholder groups, many ideas have emerged and the review group’s discussions are ongoing,” the regulator said in a statement.
Investment bankers told the Financial Times that 2024 is likely to be the bottom for Singapore listings due to political uncertainty due to general elections around the world. They said there is pent-up demand and they are working on several IPOs for next year.
The four companies that primary listed on the SGX this year (all listed on the Junior Catalyst Market) had a combined IPO total of just $31 million, including a chain of karaoke bars and a Japanese restaurant operator. Ta.
Singapore Advanced Medical Research Institute Healthcare Group, the largest listed company, has lost 71 per cent of its market capitalization since its IPO in March after reporting heavy losses. Auditors PwC questioned whether the company could continue as a going concern over the summer.
Stock markets around the world, particularly London, are struggling to attract listings in the face of intense competition and high valuations in the United States. The amount raised through IPOs across Southeast Asia this year is the lowest in at least a decade, according to Dealogic.
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Still, Malaysia has seen 46 IPOs this year, followed by 39 in Indonesia and 28 in Thailand. Although the Philippines had only three listings, their total value of $197 million far exceeded Singapore’s $31 million.
While most of the companies listed in other Southeast Asian markets were domestic, Singapore positions itself as a global hub for international public companies.
“The strategic infrastructure is here and the liquidity available in the market to invest in new listings is here,” said Lee from DBS, who is involved in the MAS review. “We need a good supply of companies choosing to go public now. We have a healthy pipeline for next year. It’s a well-oiled, idle, smooth machine. Something like that.”
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One option that is often debated is whether to allow Singapore’s compulsory savings scheme – a central provident fund typically used to finance retirement, medical expenses and property purchases – to invest more in the domestic stock market. .
“That would create a new pool of capital that would help push the multiple higher and perhaps encourage an IPO,” said Jaden Vantarakis, head of Southeast Asia equity research at Macquarie, who covers SGX.
However, he doubts whether such reforms will materialize, predicting that the MAS review will not be able to prevent a decline in the number of listings, and in November he upgraded the SGX from “outperform” to “neutral.” It was downgraded to “.
Additional reporting by Haohsiang Ko in Hong Kong
