Singapore’s stock exchange (SGX) has reached its lowest number of listed companies in 20 years, signaling challenges for the city-state’s equity market despite its reputation as a financial hub. According to the Financial Times, only four companies went public this year, contributing to the exchange’s decline to 617 listed entities, a significant drop from its 2013 peak of 782.
The decrease in listings on the SGX reflects a broader trend of domestic companies opting for overseas markets, particularly the U.S., where larger and more active markets offer better valuations and liquidity. Chinese fast-fashion giant Shein, which has been headquartered in Singapore since 2022, is considering a London listing with a potential £50 billion valuation, bypassing its host country. Similarly, Singaporean companies like Grab and Sea have chosen New York for their IPOs in recent years. Clifford Lee, head of investment banking at DBS, Singapore’s largest lender, expressed hope that this year represents a low point for the SGX, attributing the trend to a combination of global and local factors.
In an effort to address the slide, the Monetary Authority of Singapore (MAS) initiated a comprehensive review of the country’s equity markets over the summer. The review panel, which includes representatives from the SGX, MAS, and state-owned investment firm Temasek, aims to attract more fund managers and companies to the exchange. Strategies under discussion include relaxing some disclosure rules and investor safeguards, as well as increasing domestic investment in the market. However, insiders have described the situation as a “chicken and egg” dilemma: attracting more investors requires high-quality companies, but those companies may be deterred by the lack of active investment.
Singapore’s struggles with IPOs stand in contrast to its regional peers. According to Dealogic, the amount raised through IPOs across Southeast Asia this year hit a 10-year low, but countries like Malaysia (46 IPOs), Indonesia (39), and Thailand (28) still saw more activity than Singapore. Even the Philippines, with only three listings, raised $197 million—far exceeding Singapore’s total of $31 million from its four IPOs. These included smaller companies such as karaoke bar operators and Japanese restaurant chains, all listed on the SGX’s junior Catalist market.
Singapore has cultivated robust markets for bonds, derivatives, and real estate investment trusts (REITs), but replicating that success with IPOs has proven difficult. The MAS review, set to deliver its findings next August, could recommend allowing the Central Provident Fund (CPF), the nation’s compulsory savings system, to invest more heavily in domestic equities. This reform could unlock significant capital for the SGX. However, skeptics like Jayden Vantarakis, head of Southeast Asian equities research at Macquarie, remain cautious, recently downgrading SGX from “outperform” to “neutral” due to doubts about the review’s effectiveness.
Despite the current challenges, there is cautious optimism about 2024. Several investment bankers told the Financial Times they are preparing IPOs for the coming year, suggesting pent-up demand. DBS’s Clifford Lee compared the SGX to a “sleek machine” awaiting a stronger pipeline of listings. Singapore’s position as a global financial hub and its strategic infrastructure provide a foundation for growth. But as the SGX grapples with attracting high-quality listings, its ability to reverse the long-term decline will depend on the success of the MAS review and the willingness of companies and investors to commit to the local market.
