Dwindling IPOs and a steady stream of delistings highlight the urgent need for measures to rejuvenate the Singapore Exchange.
SINGAPORE: The Monetary Authority of Singapore (MAS) announced on Friday (Aug 2) the formation of a review group tasked with providing recommendations to strengthen the development of Singapore’s stock market. This initiative follows the Singapore Exchange (SGX)’s weakest year for listings in 2023.
The group, chaired by Second Minister for Finance Chee Hong Tat—who is also the Transport Minister and an MAS board member—includes private sector stakeholders and public sector representatives. Key members include MAS Managing Director Chia Der Jiun, Temasek Holdings CEO Dilhan Pillay, and Finance Ministry Permanent Secretary for Development Lai Chung Han.
The review group aims to deliver its report within 12 months.
Challenges Facing Singapore’s Stock Market
The SGX has struggled to attract new listings while witnessing consistent delistings. Only one initial public offering (IPO) occurred in the first half of 2024, compared to six in 2023 and 11 the year before. Deloitte reported that just US$35 million was raised in IPOs last year—a 92% decline from 2022.
In contrast, Hong Kong saw 68 IPOs in 2023, raising US$5.3 billion.
Adding to the challenge, SGX recorded at least 10 delistings in the first five months of 2024.
“We must make listing in Singapore more attractive, both for homegrown companies and international firms,” Mr. Chee said, emphasizing the importance of addressing market concerns.
SGX welcomed the initiative, describing it as a “whole-of-ecosystem approach” to revitalizing the equities market.
Significance of a Robust Stock Market
MAS highlighted the vital role of a dynamic equities market in Singapore’s broader capital formation ecosystem, complementing its growing private equity and venture capital landscape.
“A deep and liquid public equities market enables companies to access capital as they expand regionally and globally,” MAS stated.
To enhance the market, previous government initiatives have included funds to support IPOs for high-growth companies.
Key Focus Areas of the Review Group
The group will concentrate on two main areas:
Enterprise and Markets Workstream: Addressing market challenges, fostering new listings, and revitalizing SGX.
Regulatory Workstream: Enhancing regulations to promote growth and build investor confidence.
Participants in the review process include experts in corporate finance, investment banking, asset management, legal services, and corporate governance.
The group’s mandate includes assessing the current market, proposing strategies to attract listings, boosting liquidity, and supporting the growth of SGX-listed companies. Additionally, it will recommend communication and outreach strategies to enhance Singapore’s equity market appeal.
Balancing Investments and Market Revival
When asked about suggestions for sovereign wealth fund GIC to invest in the Singapore market, Mr. Chee noted that such an approach is “not the solution.”
Temasek Holdings and GIC prioritize returns, investing globally while remaining open to Singapore-based opportunities with strong potential.
“Reviving the stock market isn’t Temasek’s primary concern,” the investment firm stated earlier. GIC also affirmed that while it invests internationally, it remains willing to back globally competitive Singaporean companies.
The review group’s findings will be closely watched, as its recommendations are expected to play a crucial role in rejuvenating Singapore’s equities market and enhancing its global competitiveness.
