Singapore bourse may yet be upgraded to also-ran

Singapore Exchange

06/08/2024 12:00

(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own.)
    By Anshuman Daga
       SINGAPORE, Aug 6 (Reuters Breakingviews) - One
institution sticks out like a sore thumb in Singapore's growing
status as a major financial centre. The Lion City hosts more
than $4 trillion of assets under management as global wealth and
asset managers expand and rich Chinese and other high net worth
individuals flock to set up family offices in the enclave. Yet
the stock exchange lies virtually moribund. A new push to
reinvigorate it can only do so much.
    The task force that the Monetary Authority of Singapore
announced on Friday to investigate how to beef up the bourse
includes regulators and the CEO of $290 billion state-owned
investment firm Temasek. Investment banks, money managers and
others, though, will only be consulted during the year-long
process.
    They have a big challenge. So far this year companies have
raised a paltry $19 million in total through primary and
secondary listings on Singapore Exchange. That's a precipitous
drop from the $2 billion raised in all of 2019, per Dealogic.
Liquidity is low, too. Turnover velocity was 36% in 2023 versus
57% on Hong Kong's bourse.
    Part of the problem is that regional exchanges like
Indonesia have successfully been pushing for homegrown companies
to list locally. That has not worked for the city-state.
Singapore-based Grab  GRAB.O , for example, went public by
merging with a Nasdaq-listed special purpose acquisition company
in 2021.
    The larger issue is that Chinese companies have over the
years been spoiled for listing choices: Hong Kong, Shenzhen and
other mainland exchanges, and, for a time, New York.
    Of late, many of those venues have become either less
appealing or too tricky. Combined with the funds flowing into
Singapore, that ought to be an opportunity. Yet even
fast-fashion giant Shein, which relocated its headquarters to
the city, has done little more than pay lip service to
considering it as a venue for its IPO.
    The task force has some decent options to consider. The
government could take the lead, for example, by listing stakes
in some of its prized corporate assets, like Changi Airport and
port operator PSA.
    Bankers suggest encouraging $770 billion state fund GIC,
which has a mandate to invest in global firms, to allocate part
of its funds to Singapore-listed companies, though officials
have dismissed this as a solution. Currently, smaller peer
Temasek owns large stakes in Singapore Airlines  SIAL.SI  and
lender DBS  DBSM.SI . The investor's subsidiary funds typically
invest in small-to-mid-tier private companies.
    And some well-directed tax breaks could entice some of the
heaps of money managed in the city-state to be put into local
equities.
    That's unlikely to be enough to put Singapore Exchange
 SGXL.SI  on an equal footing with its much larger rivals. But
upgrading it to an also-ran may be success enough.
    Follow @anshumandaga on X
         
    CONTEXT NEWS
    The Monetary Authority of Singapore (MAS) on Aug 2. said it
has formed a review group to recommend steps to strengthen the
development of the equities market in the city-state. The
financial regulator said the task force will be chaired by
Second Minister of Finance Chee Hong Tat. It will also include
representatives from the MAS, Singapore Exchange, state investor
Temasek and public and private sector stakeholders.
    The task force will suggest measures to attract primary and
secondary listings to Singapore, improve liquidity and examine
enhancements to the regulatory regime. The group will complete
its report within 12 months.

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raphic: Singapore equity capital market fundraising dries up   
https://reut.rs/3yiAkZR
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 (Editing by Antony Currie and Aditya Srivastav)
 ((For previous columns by the author, Reuters customers can
click on  DAGA/ 
anshuman.daga@thomsonreuters.com))