Singapore government and SGX announce measures to boost stock market

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An escalator in front of an electronic screen and a ticker board at the Singapore Stock Exchange.

Lee Yen Nee | CNBC

SINGAPORE – The Singapore government on Friday announced a series of initiatives aimed at attracting “promising high growth” companies from across the region to listing on the local stock market.

Singapore is a top SEO destination for REITs or Real Estate Investment Trusts. But the city-state has struggled to attract successful initial public offerings from the tech sector, which has been a major investment theme in global markets.

“We’ve had some really successful tech companies like Nanofilm. We clearly want to see more of them,” Loh Boon Chye, Managing Director of Singapore Exchange, told CNBC in an exclusive interview.

Nanofilm Technologies International, which provides protective coating materials for smartphones and televisions, made its commercial debut on the SGX last year. It was the first major non-REIT public offering in years.

New initiatives

The Singapore government announced on Friday that it would co-invest with state investment company Temasek into a new fund to help businesses raise capital through public listings – whether primary, secondary or dual – in the city-state.

The fund will start with a first tranche of 1.5 billion Singapore dollars (1.1 billion dollars).

Here are other initiatives that have been announced:

  • The investment arm of the Singapore Economic Development Council intends to establish a new fund to invest in early stage companies and work on a possible listing in the city-state. The fund will start with up to S $ 500 million.
  • The financial regulator, Monetary Authority of Singapore, will increase its grants to help businesses cover the cost of registrations.
  • The stock exchange operator, Singapore Exchange, will help high-growth companies raise funds privately before a public listing.

“We know that the initiatives we are launching today are not a quick fix,” Singapore Trade and Industry Minister Gan Kim Yong said in a speech announcing the measures.

“But we believe they will breathe new life into the sails of our public stock market and make SGX not only a viable option but also a compelling option for innovative growth companies looking for an IPO,” he added.

The minister said four local start-ups achieved “unicorn” status this year after being valued at $ 1 billion or more. The latest is the online marketplace start-up Carousell.

These companies and others across Asia in high growth industries will “mature” and may seek public market listing in the coming years, Gan said. So, “we must strive to anchor these companies in Singapore,” he added.

SPAC registrations

In recent years, SGX has launched initiatives to stimulate IPOs.

Earlier this month, the exchange announced new rules to allow listing of special purpose acquisition companies or SPACs. The move was seen as a way to revive the Singapore IPO market.

The CEO of the exchange told CNBC that there is a “solid pipeline” of potential PSPC listings – and the first submission could arrive in a matter of weeks.

Singapore’s stock market has outperformed many of its regional peers this year, with the benchmark Straits Times rising around 7.8% at Thursday’s close.

But the initial public offerings on the Singapore Stock Exchange have been mediocre by comparison. In the first half of this year, Singapore attracted just three IPOs that raised $ 200 million in revenue, while its other financial hub, Hong Kong, had 46 listings which raised $ 27.4 billion.

– CNBC’s Weizhen Tan contributed to this report.

Correction: This article has been updated to reflect the fact that the CEO of SGX has stated that the first PSPC submission, not the listing, could be completed in a few weeks.

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