Delisitng S$12b of securities in SGX 2017

Delisitng S$12b of securities in SGX 2017

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Singapore, 11 Jan 2018 – As of 2nd half of 2017, stock market rally has moved SGX into the “trillion-dollar club” with heavier proportion of consolidation from China’s mergers and acquisitions (M&As).

Delisting, on the other hand, calls to the attention of S$12 billion in market value in 2017.  This figure is almost 40% higher than the S$8.7 billion in market value generated by newly-listed companies in the same period.

In 2016, several high-profile and large-cap companies like Neptune Orient Lines, SMRT Corp, Tiger Airways and OSIM International were privatised. Sources states that in 2015, S$8.9 billion and the end of 2016, S$15.9 billion in market capitalisation was lost from delistings. In addition, new listings added only S$6.4 billion in market value at the end of 2016.

Experts said that possible delistings will include companies across all sectors which may choose to be closer to the market they serve and to build product and brand recognition there as well as those, not garnering sufficient value and interest from investors on the SGX.

Market leader believes delistings will be fuelled by China firms’ appetite for overseas expansion as well as companies being victims of their own success. Though some quarters have blamed higher listing costs and onerous compliance demands on the SGX for the slew of exits, experts disagree, arguing that the SGX remains an attractive platform for fundraising.

Accordingly, the listing expenses of Hong Kong Stock Exchange (HKEx) and SGX are actually quite comparable. EY’s Mr Loh highlighted that SGX practises a disclosure-based regime that sets out to create a level playing field and that “should be appreciated by investors”.

Lower valuations on the SGX have led to the privatisations, and the other will be the consequence of China’s ‘One Belt, One Road’ (OBOR) initiative where mainland enterprises are encouraged to internationalise.

Following are three major Singapore-listed logistics groups targeted by Chinese groups: Global Logistic Properties (GLP) by consortium Nesta Investment Holdings, CWT by HNA Group, and Cogent by shipping giant Cosco Shipping International. Nesta is owned by HOPU Logistics Investment Management Co, Hillhouse Capital Logistics Management, SMG Eastern, Bank of China Group Investment and Vanke Real Estate (Hong Kong) Co.

Nonetheless, SGX’s recent collaboration with Nasdaq, and the way SGX is using this collaboration to engage listed companies in developing and broadening their US investor base which will in turn make the bourse more appealing.

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