In 2018, the money raised from 15 SGX IPOs fell to to just $965.6m against Hong Kong’s $45.52b.
Singapore’s status as a regional financial powerhouse is under growing pressure as the number of delistings on the Singapore Exchange (SGX) continue to outnumber listings in the last five years as Asia’s centre of gravity shifts to mainland China, according to a report by Bloomberg.
In 2018, the money raised from 15 SGX initial public offerings (IPOs), excluding depositary receipts, fell to to just $965.6m (US$710.6m), whilst 19 companies departed, taking with them a net outflow of $26.09b (US$19.2b) in market value.
In 2018, 40% of the IPOs listed on the Singapore Exchange (SGX) had market capitalisations of above $100m each, of which half were Singapore-based companies, according to a report by Deloitte. The top three in terms of fund raised in Singapore were investment holding firm Koufu Group with $74m, property developer SLP Development which clinched $55m and real estate agency PropNex with $60m.
As of end-2018, the market capitalisation of companies with primary listings in Singapore fell 14% $97.5b from end-2014, according to SGX data.
Many of the business that have left the local bourse in the past few years were well-known in Singapore, such as warehouse owner GLP and massage chair manufacturer Osim International. In 2018, 15 Singapore-based companies turned to Hong Kong to realise their share sale ambitions to raise $0.2b, data from PwC show.
“Some CEOs who’ve taken then their companies private, lamenting what they see as low valuations in the city-state, are seeking more liquid markets that can generate higher stock prices,” the report cited, adding that sofa maker Man Wah Holdings which went private in September 2009 later relisted in Hong Kong at about eight times its market value.
The gap between Singapore and Hong Kong’s stock market continues to widen as the latter cements its position as the destination of choice for Chinese companies. In 2018, Hong Kong raised $45.52b (US$33.5b) from IPOs as big name firms such as state-owned infrastructure company China Tower Corp. came into the market.
Singapore continues to be left in the shadows, as markets in Shanghai, Shenzhen, Vietnam and Thailand become more accessible to overseas investors.
Meanwhile, some home-grown firms are bypassing SGX altogether, such as gaming company Razer Inc., which opted for Hong Kong’s bourse in November 2017 on the back of its proximity to China and its cross-boundary investment channels to mainland China exchanges.
That being said, Singapore has strengthened its position as a leading wealth hub in the region, with private banks overseeing more than $2.72t (US$2t) in assets and providing alternative investment opportunities in structured products, real estate and private equity.
“The world still sees Singapore as a remarkable success story: the island nation Lee Kuan Yew turned into the world’s third-richest country in a single generation,” the report added. “A low-tax regime, transparent legal structures, a highly educated workforce and a welcoming attitude all helped turn the city-state into one of the world’s leading financial centres despite its small size and population.”
SGX has also taken steps to stop the market’s decline, forming co-listing partnerships with Nasdaq Inc. and the Tel Aviv Stock Exchange, on top of the government’s $75m grant to help companies go public.
The report highlighted that SGX continues to be an established market with recorded success in helping companies raise funds beyond their initial offerings. It also underlined that the local bourse is still the market of choice for firms looking to expand regionally and tap international investors.
“About half of the companies listed on SGX are foreign, and institutional money trusts the Singapore market,” it cited.
Here’s more from Bloomberg.