Singapore bourse woos local companies
Business Standard, 17 January 2004

The Singapore Stock Exchange (SGX) has initiated measures to invite Indian companies to list their shares on it.

Hsieh Fu Hua, the chief executive of the exchange, said one or two companies from India had approached the exchange expressing interest in listing there. He added that the exchange wanted more companies to queue up for listing.

Hua was part of the delegation accompanying Singapore’ deputy prime minister, Lee Hsien Loong, who is also the prime minister - designate. Lee was here in connection with a CII-Standard Chartered sponsored initiative to further Singapore-India economic co-operation.

A few companies are know to have show interest in getting traded on the SGX by floating Singapore Depository Receipts, but these are relatively little known technology companies. Listing on the SGX is, however, far cheaper than listing on any of the US exchanges. The cost works out around 7 per cent lower than issuing American Depository Receipts and around 4 to 5 per cent lower than issuing Global Depository Receipts.

Hua pointed out that compared to the US stock exchanges such as the Nasdaq and the New York Stock Exchange the listing requirements on the SGX were far more relaxed. As on December 31, 2003, the SGX had 551 companies listed with a market capitalization of around $ 230 billion. Compare this with the National Stock Exchange which had a market cap of $ 256 billion with 897 listed companies while the BSE’s market cap was $ 234 billion with 5640 companies listed.

Out of the total number of companies listed on the SGX, around 22 per cent are foreign companies which contribute 38 per cent of the market capitalization of the exchange. The maximum number of companies are from Hong Kong and China.

Last year the exchange saw 58 companies getting listed, which raised a total of $ 1.18 billion. Incidentally during 2003, around $ 1.3 billion was raised from the secondary market.

Data on liquidity of the stock traded on the exchange shows that the scrips of the Chinese companies are the most liquid, sometimes rising to more than 400 per cent while the stocks of Singapore companies. Other foreign companies have liquidity ranging between averaging at around 50 per cent.

For Indian issuers the costs of conversion from the Singapore denominated-share to the domestic share would be around a quarter of the cost of conversion from ADRs and GDRs to the local shares. Hua pointed out that one of the prime benefits of listing on the SGX is that there are not capital gains tax to be paid. Further with total assets under management of $ 223.6 billion and an attractive price to earnings multiple, it is a “regional financial center and trading hub in Asia”.

The timeline for making an initial public offering takes around 12 to 14 weeks beginning with the intension to make an issue and when the shares actually get listed.

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