Singapore an international marketAn update on the recent performance of the Singapore Exchange.
Singapore’s capital markets are among the most international in Asia. Foreign issuers constitute 291 (38%) of the companies listed on the Singapore Exchange (SGX). Of these foreign issuers, 133 (46%) are Chinese companies.
A total of 767 companies are listed on the SGX, of which 626 are on the Mainboard exchange and 141 are on the Catalist exchange, the SGX’s secondary board. The Mainboard and Catalist have a total market capitalisation of S$949.5bn and S$9.6bn, respectively. The average market capitalisation on the SGX is slowly returning to pre-financial crisis levels and corporate fundraising activities are increasing.
In 2012, a total of 26 issuers raised about S$4.5bn through initial public offerings (IPOs), where 14 issuers were listed on the Mainboard and 8 on the Catalist. The most prominent IPO that year was IHH Healthcare Berhad, Asia’s biggest hospital operator, which had a dual listing on the Malaysia and Singapore stock exchanges. The IPO raised a total of S$2.5bn and was the third largest in the world for 2012.
Despite 2013 being a slow year for the Singapore stock market, with the Straits Times Index closing a mere 0.01% higher than the year before, the IPO market was alive with activity. Total equity fundraising grew by 40% to S$6.3bn in 2013 and a total of 27 IPOs debuted on the SGX.
In the first half of 2013, seven IPOs floated on the Mainboard and three on the Catalist. IPO market momentum in the second half of the year, boosted by the IPO of Singapore Press Holdings’ (SPH) real estate investment trust (REIT) in July 2013. The IPO of SPH REIT featured 308.9m shares at S$0.9 each, raising a total of S$504m, and was 25 times over-subscribed.
Singapore’s IPO market subsequently became the second largest in the world in the third quarter of 2013, according to independent research. Overall in 2013, there were a total of 15 listings on the Mainboard, raising S$6,031.5m, and 12 listings on the Catalist, raising S$253.3m.
Strong draw for trusts
SGX has been a strong magnet for REITs and business trust listings in the region. In 2013, REITs and business trust listings constituted seven out of the 15 IPOs floated on the Mainboard. Some of the more prominent ones included SPH REIT, Croesus Retail Trust and OUE Hospitality Trust. However, the performance of these issuers fell below their respective IPO offer prices, with the exception of SPH REIT, which managed to achieve a gain of 0.09%.
In fact, at the time of writing, only four out of the 15 Mainboard issuers were trading above their offer prices. The top performers included Overseas Education, Pacific Radiance, SPH REIT and Linc Energy.
Tightening up Mainboard listings
SGX introduced stricter admission criteria for companies listing on the Mainboard in August 2012. Based on the new requirements, an issuer must have:
- a minimum consolidated pre-tax profit of at least S$30m for the latest financial year, with an operating track record of at least three years
- a market capitalisation at IPO of no less than S$150m if it has been profitable in the latest financial year, with an operating track record of at least three years
- a market capitalisation at IPO of no less than S$300m, with a generated operating revenue in the latest completed financial year.
?Moreover, the minimum issue price of the IPO shares has been raised to S$0.50 per share, compared with the previous price of S$0.20.
SGX also introduced new Mainboard admission rules and continuing listing obligations for mineral, oil and gas companies in September 2013. The new rules seek to better safeguard investors’ interests given the technical and specialised nature of the industry.
According to Magnus Böcker, CEO of SGX, the enhanced admission standards will increase Singapore’s attractiveness for companies and investors, further strengthening its position as an international financial centre.
Smaller companies are increasingly likely to turn to the Catalist, the specialist growth company market. These small-cap companies outperformed the Mainboard in 2013, with seven out of 12 Catalist IPOs making gains on their respective IPO prices.
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