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The View
CommentAsia
William Bratton
William Bratton

The View | How Singapore’s ‘zombie’ stock exchange is undermining its financial hub dream

  • The SGX is fading away as a place to raise capital and the situation may be irreversible, diminishing Singapore’s relevance and leaving it to contend with being a smaller and more specialised financial centre

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The dearth of new listings on the SGX points to an existential crisis for Singapore’s future as a global financial centre. Photo: EPA
William Bratton

Singapore’s stock market has always been one of Asia’s less exciting bourses but, over recent years, it has gone from being just boring to being practically a zombie.

The dearth of new listings in the city state has been the main reason its market has joined the ranks of the undead. Quite simply, the Singapore Exchange (SGX) is fading away as a place to raise capital.

The last listing of any significance was NetLink NBN Trust back in 2017. Since then, home-grown high-growth companies such as Sea and Grab have chosen to float in New York rather than at home, while Olam International recently selected London as the primary exchange for its food ingredients business.

Not only does this reduce the attractiveness of Singapore’s stock market for equity investors, it also points to an existential crisis. The number of listed companies has fallen by more than a tenth over the past five years. Unless the trend is reversed, this downward trajectory will only continue.

Singapore is definitely trying to arrest the decline: the SGX and government recently unveiled yet another set of initiatives. These included allowing special purpose acquisition companies (SPACs) to raise capital through the exchange, the use of pre-initial public offering financing to encourage home-grown firms to commit to Singapore, and allocated funds to allow issuers to defray some of the incurred listing costs.

03:34

SPACs: Everything you need to know about the finance world’s new big thing

SPACs: Everything you need to know about the finance world’s new big thing

But lifting the SGX out of its stupor is not going to be easy. In fact, it is probably now impossible because of three connected factors.

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