In a bustling financial landscape, the Singapore stock exchange is facing a challenging dilemma as the number of listed companies hits a record low. The Editor of the FT, Roula Khalaf, shines a light on this issue in her weekly Editor’s Digest newsletter, emphasizing the significance of this downward trend in the equity market.
- Declining Listings: The Singapore Exchange saw a significant drop in the number of listed companies, reaching a two-decade low with only four new companies going public this year. This decline has been a persistent issue, with the number of companies falling to 617 in October, the lowest since 2004. The reasons for this decline are multifaceted and have triggered concerns among investors and regulators alike.
- Appeal of Overseas Markets: The allure of overseas listings, particularly in robust markets like the United States, has drawn domestic companies away from the Singapore stock exchange. The trend of companies seeking listings abroad has been evident, with well-known entities like Shein, Grab, and Sea opting for listings in London and New York, further diminishing the local market’s appeal.
- Regulatory Response: To address the challenges faced by the equity market, the Monetary Authority of Singapore initiated a review involving key stakeholders like the SGX and Temasek. The objectives of this review include attracting more fund managers, relaxing disclosure rules, and fostering a conducive environment for companies to list. This proactive approach underscores the commitment to revitalizing the market.
- Global Comparison: The struggle to attract listings is not unique to Singapore, as stock exchanges worldwide, such as London, grapple with similar challenges amid intense competition and high valuations in the US market. Despite this, Singapore aims to position itself as a global hub for international companies, emphasizing its strategic infrastructure and liquidity.
- Future Outlook: Investment bankers anticipate a potential resurgence in listings for Singapore in the upcoming year, driven by pent-up demand and the ongoing efforts to enhance market conditions. While challenges persist, the outlook remains optimistic, with a healthy pipeline of companies gearing up for IPOs.
As the financial world navigates uncertainties, stakeholders in Singapore are poised to overcome current obstacles and reignite the stock exchange’s vibrancy. The collective efforts to enhance the market’s appeal, attract new listings, and foster investment opportunities signal a promising future for Singapore’s equity landscape. Embracing innovation and adapting to evolving market dynamics will be pivotal in propelling the Singapore stock exchange towards renewed growth and prosperity.
