Singapore’s stock exchange wants more than half of its listed companies to be foreign by 2012, as part of a push by the city-state to become a more powerful regional financial centre.
“We expect to see more and more companies listed here from overseas and it could be a majority. This may happen within the next five years,” Lawrence Wong, the SGX head of listing, told the Financial Times.
The forecast underscores the scale of ambition at the SGX, which is engaged in fierce competition against Asian and global exchanges for listings of companies from fast-growing countries such as China and India.
No leading global bourse has more foreign than local listings. The SGX would need to attract several hundred overseas listings to become the first.
At the end of last month, 37 per cent of the 738 companies listed on the SGX and the junior Sesdaq board were from overseas. However, the proportion of foreign companies is rising. Two-thirds of the 63 new listings last year were foreign. The SGX sees China as a significant source of potential listings, particularly in sectors such as consumer products, water treatment and the chemicals industry. It is also strong in such sectors as shipping, property and biotechnology, which have benefited from government policy.
However, the SGX is also focused on nearby countries such as Vietnam and Indonesia. “South-east Asia is very good hunting ground for us,” said Mr Wong. The SGX acquired a five per cent stake in the Bombay Stock Exchange in March and it also sees Indian companies as a future source of listings.
The Tokyo Stock Exchange last week acquired a 4.99 per cent stake in the SGX. However, Mr Wong said that it had yet to hold discussions with the TSE over issues relating to listings.
Mr Wong said that the SGX hoped to attract companies with a market capitalisation of up to S$3bn ($2bn).
Rohit Sipahimalani, Morgan Stanley’s head of south east Asian investment banking, said: “Increasing numbers of people are running companies that do not have a natural home and many of these are exploring a Singapore listing, often as part of plans to expand in Asia.”
Mr Wong brushed aside fear that competition from Hong Kong and Shanghai would reduce the number of mainland companies choosing to list in Singapore. He said: “China is a huge country with a huge economy. We don’t believe that just one or two exchanges alone will be able to supply all the funds required by Chinese companies.”
Pieter van Putten at APS Asset Management said the exchange could become a third-tier market for Chinese companies. “But that could hurt its reputation,” he said.