Prime Minister Lawrence Wong: The government encourages companies incubated in Singapore to list locally

On 8 May 2024, then Deputy Prime Minister Lawrence Wong of Singapore replied in writing to Sengkang GRC MP Chua Hing Wai in Parliament on the effectiveness of measures to enhance the attractiveness of Singapore's stock market.

The following is translated by the Singapore Eye based on the English language of the National Assembly:

Mr Chua Hing Wai (Member of Parliament for Sengkang GRC) asked the Prime Minister:

(a) How does the Government assess the adequacy and effectiveness of the existing measures to enhance the attractiveness of Singapore's stock market?

(b) Will the Government take the lead in encouraging private companies in which it holds equity through investment vehicles to list in Singapore in order to promote the development of the Singapore stock market?

Mr Lawrence Wong (then Deputy Prime Minister, on behalf of the Prime Minister): We shared the initiatives implemented by the Government and the Singapore Exchange (SGX) at past meetings. These include a range of funds to support high-growth businesses and prepare them for an initial public offering (IPO) when the opportunity arises. These funding schemes complement a wider range of initiatives, including the Singapore Monetary Authority (MAS) grant scheme to share listing costs and increase the scope of research on Singapore-listed stocks.

The Singapore Exchange has made further progress in the listing of depositary receipts (DRs), facilitating cross-border cooperation, expanding market access and improving market liquidity. The Singapore Exchange and the Thailand Stock Exchange (SET) have launched ASEAN's first exchange-level depositary receipt (DR) linkage. In May 2023, the first batch of Singapore Depositary Receipts (SDRs) for 3 Thailand stocks began trading on the Singapore Stock Exchange, and there are currently 8 Singapore Depositary Receipts (SDRs)1 for Thailand stocks. In Thailand, Singapore Telecom Berhad's (Singtel) Depositary Receipts (DRs) were last traded on the Thailand Stock Exchange in April, bringing the total number of Depositary Receipts (DRs) of Singapore stocks traded on the Thailand Stock Exchange to four2. The Singapore Monetary Authority (MAS) and the Singapore Exchange (SGX) are working to expand depositary receipt (DR) linkages with other like-minded regional partners.

Despite these efforts, conditions in Singapore's equity market remain challenging, as are those in many other countries, including developed markets such as the United Kingdom and Hong Kong3. In 2023, global initial public offering (IPO) returns continued to decline, falling by 33%; APAC earnings fell 44%. In a prolonged high-interest rate environment, strong growth companies backed by private equity and venture capital can choose to remain privatized for longer. Those companies that choose to go public tend to choose United States because of the United States capital markets and investor base, as well as its high liquidity.

These are global trends, and we have to be realistic about what we can do to change them. While the government will continue to encourage Singapore-incubated companies to list in Singapore, our investment entities – the Government of Singapore Investment Corporation (GIC) and Temasek – operate on a commercial basis and have a responsibility to deliver good long-term returns for the benefit of Singapore and Singaporeans. They regularly negotiate with their portfolio companies on options to create shareholder value, which may include listing in Singapore. However, the final listing decision must be made by the company itself in accordance with its business objectives and development plan. This will maintain Singapore's attractiveness to founders of these companies and global investors who invest in them.

Note to issue number 38:

1 截至 2024 年 4 月，新加坡交易所(SGX)上共发行了8只新加坡存托凭证（SDRs)。 前3只新加坡存托凭证（SDRs)是泰国机场、CP All 和 PTT Exploration and Production。 5只新加坡存托凭证（SDRs)是 Advanced Info Service、Delta Electronics、Gulf Energy、Kasikorn Bank 和 Siam Cement，于 2024 年 4 月 1 日上市。

2 There are 4 Depositary Receipts (DRs) on the Thailand Stock Exchange (SET). Singapore Airlines' depositary receipts were listed in September 2023, while defense company ST Engineering and technology company Venture Corp both listed in February 2024. Singapore Telecom's depositary receipts were listed on SET on 1 April 2024.

3 According to EY's 2023 global IPO trends, Hong Kong's IPO market raised a 20-year low this year due to lack of liquidity, low investor sentiment, interest rate hikes, and tensions between China and the United States.

The following is the content of the question in English:

Mr Chua Kheng Wee Louis asked the Prime Minister (a) what is the Government’s assessment of the adequacy and effectiveness of existing measures to increase the attractiveness of the Singapore equities market; and (b) whether the Government will take the lead in promoting our equities market by encouraging the privately-owned companies in which it holds equity through its investment vehicles to list in Singapore.

Mr Lawrence Wong (for the Prime Minister): We have shared, in past Sittings, the initiatives that the Government and the Singapore Exchange (SGX) have implemented. These include a range of funds to support high-growth enterprises and to prepare them for an Initial Public Offering (IPO) when the opportunity arises. These funding schemes complement a broader suite of initiatives, which includes the Monetary Authority of Singapore’s (MAS’) grant schemes to defray listing costs and increase research coverage of Singapore-listed stocks.

SGX has also made further progress in Depository Receipt (DR) listings, fostering cross-border partnerships to broaden market access and improve market liquidity. SGX and the Stock Exchange of Thailand (SET) have launched the first exchange-level DR collaboration in ASEAN. The first three Singapore DRs on Thai stocks (SDRs) commenced trading on SGX in May 2023, and there are now eight SDRs1. In Thailand, a Singtel DR was the latest to be traded on the SET in April, bringing the total number of DRs on Singapore stocks traded on the Thai exchange to four2. MAS and SGX are working to broaden the DR linkages with other like-minded regional partners.

Notwithstanding these efforts, the conditions remain challenging for the Singapore equities market, as they are for stock exchanges in many other countries, including developed markets like the United Kingdom and Hong Kong3. In 2023, global Initial Public Offering (IPO) proceeds continued to decline, falling by 33%; while Asia Pacific IPO proceeds were down by 44%. 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.

These are global trends and we have to be realistic about what we can do to change them. While the Government will continue to encourage Singapore-incubated companies to list in Singapore, our investment entities – 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. However, the final listing decisions will have to be made by the companies themselves, based on their commercial objectives and growth plans. This will preserve Singapore’s attractiveness to the founders of these companies and the global investors who invest in them.

Note(s) to Question No(s) 38:

1 There is a total of 8 SDRs launched as of April 2024, on SGX. The first 3 SDRs are Airports of Thailand, CP All and PTT Exploration and Production. The 5 new SDRs are Advanced Info Service, Delta Electronics, Gulf Energy, Kasikorn Bank and Siam Cement were listed on 1 April 2024.

2 There is a total of 4 DR on SET. The DR on Singapore Airlines was listed in Sept 2023, while the DRs on defence company ST Engineering and tech firm Venture Corp were both listed in Feb 2024. Singtel DR was listed on SET on 1 April 2024.

3 According to EY Global IPO Trends 2023, Hong Kong’s IPO market experienced a 20-year low in proceeds this year, due to a lack of liquidity, muted investor sentiment, interest rate hikes and challenging China-US relations.

HQ丨Editor

HQ丨Editor

Singapore Parliament丨Source

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