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The number of companies listed on the Singapore Exchange has fallen to its lowest level in two decades, with just four listings this year and several delistings, as Singapore regulators investigate how to stem the slide.
The number of companies on the Singapore Exchange fell to 617 in October, the lowest level since September 2004. Especially the bigger, bigger companies.
“I certainly hope this year is a low point,” said Clifford Lee, head of investment banking at DBS, Southeast Asia’s largest bank and Singapore’s most valuable listed company. “It’s a combination of factors.”
Shein, a Chinese fast fashion company that has been headquartered in Singapore since 2022, is currently considering listing in London, with a potential market valuation of 50 billion pounds, which would make it one of the largest listed companies in the UK. Several of Singapore’s best-known companies, including super app Grab and e-commerce group Sea, have chosen to list in New York in recent years.
Singapore has benefited from massive private capital inflows into the city-state, which have coincided with a boom in the family office industry, while SGX has built strong markets for bond trading, derivatives and real estate investment trusts. But it has struggled to repeat that growth through an initial public offering.
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This summer, the Monetary Authority of Singapore launched a review of the country’s stock market, with a panel including the heads of SGX, the Monetary Authority and state investment company Temasek.
The group, which will report its findings next August, has so far discussed how to attract more fund managers to invest in the stock market to address demand issues, while relaxing some disclosure rules and investor safeguards to encourage more companies to list. people.
“It’s a chicken-and-egg situation,” the person said. “We have to get great companies listed and see more fund managers in the market who will only be attracted by the prospect of investing in great companies.”
“As the review team engages extensively with a number of stakeholder groups, a number of ideas have emerged and discussions with the review team are ongoing,” the regulator said in a statement.
Several investment bankers told the Financial Times that 2024 could be the lowest point for listings in Singapore due to political uncertainty surrounding global elections. They say there is pent-up demand and they are preparing for several initial public offerings (IPOs) next year.
Four companies debuted on SGX this year, all on Catalist’s junior market, with a combined IPO value of just US$31 million, including a chain of karaoke bars and a Japanese restaurant operator.
The largest listed company, Singapore Institute of Advanced Medical Sciences Healthcare Group, has lost 71% of its market value since its initial public offering in March after reporting heavy losses. Its auditors, PricewaterhouseCoopers, raised questions about its ability to continue as a going concern over the summer.
Stock markets around the world, especially London, have struggled to attract listings in the face of fierce competition and high valuations in the United States. Data from Dealogic shows that the amount of capital raised through IPOs across Southeast Asia this year is the lowest in at least 10 years.
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Even so, Malaysia has had 46 IPOs this year, compared with 39 in Indonesia and 28 in Thailand. Although there are only three listed companies in the Philippines, their total value is US$197 million, far exceeding Singapore’s US$31 million.
While most companies listed in other Southeast Asian markets are domestic, Singapore has positioned itself as a global hub for internationally listed companies.
“The strategic infrastructure is here and the liquidity available in the market to invest in new listings is here,” said DBS’s Lee, who is involved in the MAS review. “Now we need a lot of companies that choose to go public. We have a healthy pipeline over the next year. It’s like a well-oiled, smooth machine that hasn’t been used yet.
One option often floated is whether to allow Singapore’s mandatory savings system – the Central Provident Fund, which is typically used to fund retirement, healthcare and property purchases – to invest more in domestic equities.
“This will create new pools of capital, help drive up price-to-earnings ratios and potentially trigger IPOs,” said Jayden Vantarakis, head of Southeast Asia equity research at Macquarie, who covers SGX.
But he expressed doubts that such reforms could be achieved and in November downgraded SGX’s rating to “neutral” from “outperform”, in part because he expected the MAS review to be unable to stem a decline in the number of listed companies.
Additional reporting by Gao Haoxiang in Hong Kong
