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Singapore Exchange is eyeing a reversal in its slowing IPO numbers by listing Chinese companies looking to hedge political risks and start-ups seeking to tap the public market. SGX is in talks with the Chinese firms that are looking for alternatives to the US or Hong Kong IPO markets for secondary listing, aiming to raise their profiles in Southeast Asia.
The exchange is likely to see 30-40 first-time and secondary listings annually for the next five years. Pol de Win, head of global sales and origination at Singapore Exchange (SGX), said, “The 30-40 first and second listings are sought to be more than double the average of about 13 listings a year since 2017.”
Many Chinese firms with US-listed shares are looking for alternative venues amid the risk of delisting. NIO Inc, a China-based electric vehicle maker, last month entered the secondary listing of its Class A ordinary shares on the SGX, after making its Hong Kong stock market debut on March 10. Likewise, many other companies are considering different markets with the United States tightening financial disclosure rules. This is eventually helping Southeast Asia in becoming a breeding ground for tech-backed billion-dollar businesses.
Hong Kong financial market, which is considered the gateway to mainland China by investors, listed only one company in May, the lowest IPO count in the month in over a decade.
SGX IPO market to receive a boost
Stock listings have slumped in Singapore in recent years amid liquidity concerns, prompting a government-backed effort to strengthen the market. In 2021, Singapore introduced a new funding package to support high-growth companies raising capital in the country’s public equity market. Apart from this, Singapore had launched another initiative to attract more firms to its stagnating IPO market and is allowing the listing of special purpose acquisition companies (SPACs).
The Chinese companies listing on the SGX will help it to regain some ground after missing out on big IPOs to other financial hubs. “The primary and secondary listings that SGX is targeting will likely have a market value of at least S$500 m ($364 m) to S$1 bn,” according to de Win.
SGX is in talks with firms in China and Southeast Asia that operate in financial tech and consumer tech areas, as well as real estate investment trust and blank check companies. The IPO activity was slammed due to market turbulence but is expected to revive by the end of 2022.
