Talks aiming to revitalize Singapore’s capital market were being discussed for months, but changes could be right around the corner after its Second Minister for Finance reiterated the commitment to revive its languishing stock market.
Leading a task force focused on fortifying the equities market, Chee Hong Tat, Second Minister for Finance, revealed plans to eliminate outdated regulations, foster the listing of high-quality companies, and enhance market liquidity, according to the latest report by Bloomberg. These measures, which might involve reducing listing expenses and broadening the range of equity derivatives, are expected to be rolled out gradually within a 12-month review period.
Chee remarked during an event in Singapore on Monday that reviving Singapore’s equities market is a challenging endeavor, especially considering the global headwinds impacting other exchanges and the intensifying competition in this sector.
However, he noted that the task force is willing to make modifications and experiment with fresh approaches because without trying, the chances of success are non-existent.
Following mounting pressure from industry participants to breathe new life into the domestic equities market, which has been grappling with poor performance, diminishing market capitalization, and lackluster trading activities, the task force, comprising representatives from the central bank, Temasek Holdings Pte state investment company, Singapore Exchange Ltd, and various industry stakeholders, aims to revamp various aspects.
The Straits Times Index (STI), a market capitalization weighted index that tracks the performance of the top 30 companies listed on Singapore Stock Exchange (SGX), is hovering at its highest level since 2018, but what concerns the market is the trading volume that sees a sharp decline from 600 million to over 1 billion a day in early this year to around 200-300 million since the end of the second quarter of 2024.
One area under scrutiny involves simplifying the disclosure requirements in prospectuses for companies conducting initial public offerings and secondary listings, Chee mentioned. Additionally, the Monetary Authority of Singapore will explore relaxing some of the checks mandatory for all retail clients.
With only one company daring to go public in Singapore during the first half of 2024, the nation has found itself at the bottom of the initial public offering (IPO) performance ranking in Southeast Asia.
The sole entrant into the market was cancer treatment specialist, Singapore Institute of Advanced Medicine (SAM) Holdings, which secured a modest US$20 million ($27 million) from its debut in February – the smallest IPO fundraising figure in the region this year, as highlighted by professional services firm Deloitte.
In stark contrast, Malaysia saw a total of 21 companies going public, collectively raising approximately US$450 million, establishing itself as the leading IPO market in the region for the first half of 2024. Following closely behind was Thailand, with 17 companies making their market debut and amassing around US$427 million in funds.
Moreover, the strengthening in SGD against the greenback is driving foreign investors away in search of other markets. The current exchange is SGD 1.29 to USD 1, the lowest since late 2014.
Thus came the envisioned changes that also include introducing inducements to promote listings, reducing listing fees, and enhancing research coverage, with a focus on attracting growth firms from emerging markets, especially in sectors like fintech, innovation, and sustainability.
Addressing liquidity enhancement strategies, which encompass incentivizing market makers to facilitate price determination, broadening stock indices, and expanding the spectrum of equity derivatives available, Chee emphasized, “We are prepared to make daring adjustments, but only after meticulously weighing the trade-offs.”
