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SGX and its role in Singapore’s rise as an international financial centre

Patrick Lecomte
Patrick Lecomte 9/4/2017 08:00 AM GMT+08  • 8 min read
SGX and its role in Singapore’s rise as an international financial centre
(Sept 4): Singapore has earned its place among the top financial centres of the world despite not having a particularly large or active stock market. This could change if it succeeds in its ambition of becoming more than just a global asset management cen
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(Sept 4): Singapore has earned its place among the top financial centres of the world despite not having a particularly large or active stock market. This could change if it succeeds in its ambition of becoming more than just a global asset management centre, and captures a larger portion of the value being created by the region’s knowledge economy.

The latest Global Financial Centres Index (GFCI) released in March ranks Singapore third among international financial centres. London and New York were in first and second place respectively. Hong Kong was ranked fourth and Tokyo fifth. Last year, stocks listed on the Singapore Exchange had a total market capitalisation of only US$640 billion, according to the World Federation of Exchanges. That is far behind exchanges in some of the biggest economies in Asia. For instance, Japan had a market cap of nearly US$5 trillion. The Shanghai and Shenzhen exchanges had market caps of more than US$4 trillion and US$3.2 trillion respectively. Hong Kong had a market cap of nearly US$3.2 trillion and Australia had a market cap of almost US$1.3 trillion.

To make matters worse, in 2016, close to $16 billion of market capitalisation on the local exchange was erased because of the delisting of a few prominent companies. And, the pace of new listings has been less than inspiring. According to a PwC report, some $454 million was raised through IPOs in the first half of 2017. In 2016, $2.3 billion was raised from 16 IPOs on the SGX, the bulk of which came from the listing of three real estate investment trusts. Meanwhile, turnover in the local stock market has declined since the start of the decade. Total securities market turnover in 2016 was $271.91 billion, some 32% less than the corresponding figure of $401.95 billion for 2010.

  • Singapore is home to more than 1,200 financial institutions covering a wide range of products and services;
  • Singapore has become one of the global leaders in asset management and private banking, with $2.6 trillion in assets under management according to the 2015 MAS Asset Management Survey, right behind Switzerland ($2.9 trillion);
  • The listed real estate sector has gone from strength to strength with a combined market cap of $71.6 billion for 31 S-REITs as at March this year. It is the second-largest in Asia;
  • More than 160 private equity and venture capital managers are based in the Lion City;
  • Singapore is a key insurance marketplace in Asia, by hosting a large number of international general insurance and reinsurance groups; and
  • The infrastructure has been successfully built. For example, the new CBD at Marina Bay boasts buildings designed to accommodate the financial sector’s most tech-savvy players.

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