Singapore Exchange Limited (SGX: S68) is experiencing mixed fortunes.
While there is strong demand for commodity and currency derivatives, with a 42.1% increase in volume for fiscal 2024 (ending June 30, 2024), the cash equities market is struggling.
The total traded value decreased by 4.2% to S$263.7 billion, and traded volume fell by 2.5% to 341.4 billion shares, primarily due to a lack of new equity listings (IPOs).
In the first half of 2024 (1H 2024), only one company, Singapore Institute of Advanced Medicine (SGX: 9G2), went public, making Singapore the least active IPO market in Southeast Asia.
Dry Spell for IPOs
SGX had a notably quiet IPO period this year, attracting just one listing in 1H 2024. Comparatively, Malaysia had 21 successful listings raising nearly US$450 million.
Despite grants from the Monetary Authority of Singapore (MAS) covering 70% of listing costs, many companies are choosing to list in the US instead. Examples include Ryde Group and Super Hi International Holdings.
Hope on the Horizon
There might be glimmers of hope for SGX with new IPOs. Food Innovators Holdings (SGX: KYB) recently launched an IPO on the Catalist Board, aiming to sell 14 million shares at S$0.22 each, with overwhelming initial interest.
Another potential listing from Goodwill Entertainment is in the works, which could further support the market’s revival.
Looking Ahead to 2025
There are signs of future listings, particularly in 2025. Nippon Telegraph and Telephone might introduce a data centre REIT potentially raising US$1 billion, while Thai Beverage is reviving IPO plans for its beer unit.
MAS Task Force
The MAS has established a task force to address issues with liquidity and new listings. They aim to propose measures that enhance Singapore’s equity market and attract more companies to list.
Conclusion
The path forward for SGX won’t be easy, but there are positive developments. Effective government strategies could lead to improved valuations and liquidity in the market.
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Disclosure: Royston Yang owns shares of Singapore Exchange Limited and NetLink NBN Trust.
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