Singapore companies are continuing to list in Hong Kong, drawn by the hope of better liquidity and higher valuations. Are they really better off there? What can Singapore do to raise its game?

SINGAPORE (Apr 9): Mark Liew, chief operating officer at PrimePartners Corporate Finance (PPCF), recalls some of his friends talking excitedly about having bought shares in Razer when the maker of computer gaming accessories got listed in Hong Kong in November last year. Knowing his friends typically invested in profitable, dividend-paying stocks in Singapore, Liew tried to warn them that Razer had a far more risky profile. “Eh, loss-making,” he said. But his friends were not deterred. “Yah, yah, I know, but Hong Kong lah,” one of them replied.

“If Razer came to Singapore, they wouldn’t say that,” Liew says. Co-founded by Singaporean Tan Min Liang, Razer sold shares in an IPO in Hong Kong at HK$3.88, putting the company’s value at HK$35 billion ($5.9 billion). Buoyed by a retail over-subscription rate of 290 times, the stock quickly hit HK$5.49 on its trading debut on Nov 13 before closing at HK$4.58. But Liew’s scepticism about the sustainability of this valuation was not unfounded. Shares in Razer have since tumbled nearly half from their peak, to trade at 25.7% below its IPO price as at March 29.

Still, the fact that a hot technology company like Razer, which has headquarters in Singapore and San Francisco, chose to be listed in Hong Kong, and achieved a lofty valuation when it initially hit the market, continues to burnish Hong Kong’s reputation as a capital-raising centre. And, while Singapore has established itself as a leading listing venue for real estate investment trusts, it is continuing to lose listings of growth-oriented companies to Hong Kong.

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