Tighter rules: A file photo of the SGX Centre in Singapore. The proposed rule change is part of SGX’s efforts to improve the securities market. — Bloomberg
SINGAPORE: More companies are seeking secondary listings on the Singapore Exchange (SGX) as part of their expansion plans into the region.
But while foreign firms are eyeing a secondary listing here, more local companies seeking to go public are increasingly choosing to do so in the United States even as efforts are being made to revitalise the Singapore stock exchange.
Art Karoonyavanich, head of equity capital markets at DBS Bank, said that in 2024, DBS has encountered more businesses seeking secondary listings in Singapore as part of their expansion into South-East Asia.
He said: “We are seeing more companies seeking offshore secondary listings in Singapore, including those from the technology and healthcare sector.
“They are exploring Singapore as a springboard to expand their South-East Asian presence and capture the region’s growing opportunities, such as its rising middle-income population, growth in eCommerce transactions and deepening internet penetration.”
Recent initiatives to expand SGX’s linkages with other exchanges in the region should also deepen liquidity and provide potential issuers access to a diversified pool of investors, he added.
According to the SGX, four foreign firms completed their secondary listings on the bourse between 2022 and 2023: electric vehicle manufacturer Nio, beverage company Emperador, telecommunications company Comba Telecom and agriculture firm TSH Resources.
Additionally, Hong Kong-listed food and beverage company Helens International is set to complete its secondary listing on the SGX later in 2024.
Other observers told The Straits Times that the US route holds the promise of higher valuations and access to a larger pool of investors, although they also warned that firms must be prepared for poor share price performance after the listings.
Companies ranging from tech startups to firms in the manufacturing industry have been eyeing or conducting initial public offerings (IPOs) in other countries, particularly in the United States, even amid macroeconomic headwinds there.
Only one company – cancer treatment provider Singapore Institute of Advanced Medicine Holdings – braved a listing here in the first half of 2024, making the Republic the worst-performing market in South-east Asia for IPOs.
But six Singapore-based companies chose to list on stock exchanges in the United States instead of the SGX during this time: contract manufacturer Tungray Technologies, ride-hailing operator Ryde Group, Haidilao hotpot operator Super Hi International Holding, human resources firm YY Group Holding, medical technology start-up Mobile-health Network Solutions and safety equipment supplier Rectitude.
Rectitude made its debut on the Nasdaq stock exchange on June 21, raising US$8mil from the sale of two million ordinary shares priced at US$4 apiece.
Its chief executive Zhang Jian told The Straits Times on July 11 that the firm chose to list in the United States because it has plans to expand its operations there. Rectitude will also consider a dual listing on the SGX in the future as the company’s “roots are still in Singapore”, he said, without elaborating on the timeline.
The Straits Times also understands that catering firm Premium Catering is pursuing an IPO on the Nasdaq worth US$9mil.
Gavin Chia, chief executive of digital brokerage Moomoo, said the US market has traditionally been a popular venue for companies seeking to list, given its large institutional and retail investor base.
“US exchanges typically offer greater liquidity and market depth – there is also a common perception among potential listees that they can achieve higher valuations in the United States relative to a listing in Singapore,” he said.
Vasu Menon, managing director of investment strategy at OCBC Bank, said the US stock market is much more active than the SGX, and is more attractive to investors and traders who place importance on liquidity.
He added: “Being on the US stock exchange may also yield some benefits in terms of branding, as the US exchange is one of the largest in the world and these companies may be hoping that the brand mileage and profile will benefit their business, especially if there are plans among these companies to expand into the United States.”
But listing on the US bourse may not always be the best strategy because what companies may be hoping to achieve may not always materialise, especially if they are a “small fish in a big pond” and become obscure, Menon said.
“In such an instance, the share prices of these companies may perform poorly, leaving those who invested in the initial public offer unhappy and disillusioned.
“For companies with a greater local and regional business presence, it may still make sense to list on the SGX instead, as investors here and in the region may know and understand their businesses better, which can produce better outcomes for investors.”
Checks by The Straits Times found that some of the Singapore-based firms that recently went public in the United States are experiencing poor stock performance.
Of the six companies that debuted on US stock exchanges in the first half of 2024, only Ryde has seen its share price increase since its IPO.
The ride-hailing firm’s stock rose from US$4 at IPO to US$7.40 as at July 11, marking a gain of 85%. The biggest loser was YY Group Holding, which saw its stock price drop from US$4 at IPO to 79 US cents at the last close, a decrease of over 80%.
Simpple, a local property technology start-up which made its debut on the Nasdaq in September 2023, has also seen its stock price plummet, from US$5.25 at IPO to 43 US cents as at July 11, a decrease of more than 90%. — The Straits Times/ANN
