Reply to Parliamentary Question on listings and delistings on the Singapore Exchange
QUESTION NO 3355
NOTICE PAPER 1942 OF 2019
FOR WRITTEN ANSWER
Date: For Parliament Sitting on 6 January 2020
Name and Constituency of Member of Parliament
Mr Ang Wei Neng, MP, Jurong GRC
To ask the Prime Minister (a) how many Singapore companies have chosen to be listed on stock exchanges outside of the Singapore Exchange (SGX) in the past 10 years; (b) how many companies have (i) listed and (ii) de-listed from the SGX in the past 10 years, broken down by Singapore and foreign companies; and (c) what are the strategies to encourage more companies, local and foreign, to be listed on the SGX.
Answer by Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS:
1 Mr Speaker, Mr Ang’s question is about the prospects and strategies of SGX. We are in a leading position in the trading of Asian equity and commodity derivatives, foreign exchange and fixed income. In cash equities, SGX remains one of the most international exchanges globally with overseas companies making up 43% of total market capitalisation. SGX is also the largest and most international Real Estate Investment Trusts (“REITs”) market in Asia ex-Japan, with REITs from US, Europe listed on its mainboard.
2 However, Singapore’s cash equities market has not grown as fast as the derivatives and REITs markets. Wider trends play a big part.Globally, Initial Public Offerings (IPOs) fell 20% to a three-year low, and number of IPOs in Asia hit a five year lowSource: Financial Times report – Global drop in IPOs stirs fear for shrinking public market (30 Dec 2019). This is because companies are staying private for longerStudies have shown that the average age of US tech companies going public was 11 years in 2014, compared to an average of 4 years in 1999. Source: Bloomberg TV – Blackrock’s Wiseman Sees Companies Staying Private Longer (25 Oct 2019); Mckinsey report – Grow fast or die slow: Why unicorns are staying private (May 2016), as they have alternative sources to fund growth and expansion.
3 At the same time, more companies are delisting from public equity markets. In the US, for instance, for the first time since 2006-07, the value of listed companies going private in 2018 exceeded the value of private companies going public, causing a net outflow from the US public markets.
4 Specific to Mr Ang’s questions, from 2009-2019, 279 new companies listed on SGX, of which 60% are Singapore companies. However, over the same period, we saw 302 delistings of both Singapore and foreign companies. Unfortunately, there are no ready statistics available to Mr Ang’s specific question on the number of Singapore companies listed overseas.
5 SGX is taking a number of initiatives to encourage more equity listings. There is no silver bullet solution, and SGX will need to undertake a multi-prong approach over a period of time to re-invigorate the local equity market. The key measures are.
6 First, increase the number of market makers and liquidity providers to enhance market liquidity, and admit new Mainboard issue managers and Catalist sponsorsSGX currently has 47 Mainboard issuer managers and Catalist sponsors, out of which 31 are active in underwriting/sponsoring IPOs on SGX Mainboard/Catalist. There are 7 new Mainboard issue managers and Catalist sponsors in the past two years. W Capital and Evolve Capital are the latest two companies authorised by SGX in 2019..
7 Second, develop cross-border partnerships and expand SGX’s global footprint. SGX has partnered Tel Aviv Stock Exchange and Nasdaq to boost capital raising opportunities for technology companies. These partnerships have generated a healthy pipeline of companies looking to secondary list on SGX.
8 Third, SGX has introduced the Dual Class Share structure to enhance Singapore’s value proposition as a listing destination for new high-growth technology companies.
9 Fourth, work with private market platforms to build the IPO pipeline. Such platforms can provide growth companies access to a wide network of investors for financing needs just prior to IPO.
10 Finally, step up investor outreach efforts to generate investment ideas and interest.
11 MAS supports SGX’s efforts.It has launched the S$75 million Grant for Equity Market Singapore or GEMS, in February last year. MAS will co-fund the listing expenses of companies in high-growth and technology sectors as well provide grants to widen the research coverage of SGX listed stocks, especially of small and mid-cap companies. Since the grant inception, MAS has approved seven listing grant applications. Research houses tapping on GEMS have committed to hiring close to 50 fresh graduates and experienced research analysts over the next three years.