SINGAPORE needs to be realistic about the global trends affecting the city-state’s equities market, and the actions that can be taken to change them, said Deputy Prime Minister Lawrence Wong on Wednesday (May 8).
Wong, who is also finance minister, said that the conditions for Singapore’s stock market to attract companies to list remain challenging.
But he also noted that stock exchanges in developed markets, such as the United Kingdom and Hong Kong, suffer from the same problem.
Global proceeds from initial public offerings continue to decline, falling 33 per cent in 2023. In the Asia-Pacific, they fell even more at 44 per cent, said Wong.
“Strong-growth companies backed by private equity and venture capital have the option to remain private for longer in the high-for-longer interest rate environment. Those that choose to go public tend to gravitate to the United States due to its deep and liquid capital market and investor base,” he added.
Wong was responding to a parliamentary question by Member of Parliament for Sengkang GRC Louis Chua, on whether the existing measures to increase the attractiveness of Singapore’s stock market have been effective. He also asked whether the government would encourage private-owned companies in which it holds equity to list on the Singapore Exchange (SGX).
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The Financial Times recently reported that government agencies here are studying proposals by an investor association that includes state funds such as GIC and Temasek to shake up its struggling stock market.
Wong, who will take over as Singapore’s prime minister next Wednesday, noted that the government and SGX have implemented several initiatives to shore up listings.
These include a range of funds to support high-growth enterprises, as well as grant schemes to defray listing costs and increase research coverage of Singapore-listed stocks.
SGX has also tried to broaden market access by working with Thailand’s stock exchange on depository receipt listings.
A depository receipt represents shares in a foreign company traded on a local stock exchange, and gives investors the opportunity to hold shares in the equity of foreign countries.
While the government will continue to encourage companies incubated here to list on the SGX, Wong noted that GIC and Temasek “operate on a commercial basis and have a mandate to deliver good long-term returns for the benefit of Singapore and Singaporeans”.
“They regularly engage their portfolio companies on options to create shareholder value, which may include a listing in Singapore,” he added.
“However, the final listing decisions will have to be made by the companies themselves, based on their commercial objectives and growth plans.”
