Reliable and business-friendly-Singapore’s secrets of success
When it comes to raising capital for any purpose from traditional bricks-and-mortar businesses, to wealth funds, to the most blue-sky fintech, Singapore is an ideal place to be.
In Singapore, more than 40 per cent of the firms listed on SGX – with total market capitalisation of nearly US$1 trillion – originate from overseas. The figures speak for themselves compared to other global markets where many developed markets’ stock exchanges host mainly domestic companies.
The fixed-income market is even more international, says Chew Sutat, SGX’s Head of Global Sales and Origination, with more than 5,000 bonds listed and issuance of about US$2 trillion “in more than 20 currencies representing 1,500 issuers from over 50 countries”.
So, what makes Singapore such an ideal place to raise funds through equity listings, issue debt and do business? Chew believes it’s a combination of factors that are baked in the cake in Singapore. “Singapore is safe, trustworthy, and reliable,” he says.
According to Chew, the consistency is great, which international investors love and it’s why SGX is the region’s most international exchange. “It is predicated on the rule of law, the clarity and transparency of taxation as well as a business-friendly environment which allows capital to be managed inside and outside of Singapore and to deploy into the private and public capital markets in Singapore, including fintech investments,” he says.
Chew says Singapore was also a tech-leader before fintechs became flavour of the month. “The backdrop of Singapore itself is important.” “With the efforts by the government as well as the monetary authority, they have created a very international financial sector, underpinned by a couple of key basic principles,” he says.
The first principle, Chew says, is the rule of law, particularly regarding innovation. “That is well understood by international investors and that translates into everything from capital-raising, to things like fintech and the protection of IP,” he says.
"Singapore is one of the leading places where intellectual property and innovation are being recognised.”
“It makes us essentially, the leader in terms of business operating environments in Asia,” Chew says.
The next principle, which Chew believes is equally important, is taxation. “A combination of clear tax rules and the absence of a capital gains tax, withholding tax or a tax on dividends and the like, makes it attractive for international investors to deploy capital into Singapore and be confident about the mobility of capital in and out of the country,” he says.
The net result of this environment is the creation of an ecosystem which has attracted close to US$2.3 trillion into Singapore’s wealth funds. This includes Singapore’s own sovereign wealth funds as well as the sovereign wealth funds of Norway, China, Korea, and Japan who are also in Singapore.
“Interestingly, this stable environment and deep pool of capital are attracting many investors whose assets are held internationally” Chew says.
“This cuts across numerous sectors ranging from infrastructure and real estate to consumer products and healthcare.”
Chew cites some of the region’s biggest consumer brands which choose to list in Singapore “because, while they could stay in their domestic markets and be recognised there, when these businesses expand and do business across borders, they look for an international financial centre where they can easily access the capital market and deploy capital across multiple jurisdictions”.
Furthermore, Singapore is a driving force in technology investment across the region and has always tried to stay ahead of the curve, with the government actively pursuing a smart nation strategy.
“The government has put in a lot of effort to create another spurt of innovation by supporting key sectors like robotics, AI, and of course fintech,” Chew says. Proof of this lies in the city state being home to close to 500 fintech start-ups.
Raghav Kapoor, Co-Founder and CEO of Singapore-based global investment research network Smartkarma, concurs. “No other city in the world can compete with Singapore when it comes to access to global capital, a global client base, and a competitive business environment,” says Kapoor.
“For a business owner of a global financial company, Singapore’s promise to always be fiercely independent and an open market is pivotal and unrivalled.”
Kapoor says that for Smartkarma, one of the first capital market fintechs that wanted to cater to a global audience, Singapore was a prime candidate when it came to finding a place to nail up the firm’s shingle. “Put simply, SGX is the most international exchange in Asia,” he says.
“Singapore uniquely gave us access to global fund managers, talent, tech, and a very forward-thinking regulatory structure,” he says.
“It’s proven itself to cater to global needs - it can’t rely only on its domestic market, and as such, thinks heavily about how to position itself through tech, collaboration with fintech companies, and being that open market.”
Kapoor says SGX worked hand-in-glove with Smartkarma from the earliest days.
“We’ve built a special role helping listed companies connect with independent research and global investors,” he says. This has been particularly important in a post-MiFID environment where brokers and investors have been impacted.
“The exchange has taken it upon itself to work with us to deliver essential services in this new environment,” says Kapoor.
It’s also why fintech powerhouse Israel chooses to do business in Singapore.
Lior Navon, Head of Sales and Markets Development at Tel Aviv Stock Exchange (TASE) says Singapore’s openness makes it fertile ground for a coming round of fintech IPOs. “For the past year, we have been collaborating with SGX and are moving forward in educating the market in both Israel and Singapore, with an eye to constructing a platform to cross-list high tech IPOs in both markets,” he says.
“There are a number of relevant companies in the pipeline and we believe that additional high-tech companies will see the advantages the Singapore market engenders as a bridge to Southeast Asia as well as the opportunity to leverage access to investors and liquidity in both the Singapore and Tel Aviv exchanges.”
Robert Fröjd, Managing Director, South Asia, South-east Asia & Pacific, for Nasdaq, says Singapore’s ecosystem marks the nation out as a global leader for creating a successful trading environment for FX, commodities, fixed income, derivatives, not to mention a robust wealth management industry.
“We have found quite significant synergies between the private sector and Singapore’s regulator that encourage new technologies and innovation,” he says. “This makes for a healthy, forward-looking capital market that maintains and grows its role on the global financial stage.”
According to Fröjd, Nasdaq has been a technology partner to SGX since 2003 and has broadened and deepened the relationship over time. “We provide SGX with a host of technologies spanning trading, clearing, risk management and surveillance,” he says.
In SGX, Nasdaq has found a client that embraces new technologies and strives to constantly evolve their markets to the betterment of their customers and the Singapore capital market ecosystem. “It’s a relationship Nasdaq is very proud of,” says Fröjd.
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