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Another possible delisting hastens calls for SGX revival

Jovi Ho
Jovi Ho • 6 min read
Another possible delisting hastens calls for SGX revival
The delisting of companies should not be seen as a negative, says Thilan Wickramasinghe, head of Singapore research at Maybank Securities. Photo: Albert Chua/The Edge Singapore
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Oversea-Chinese Banking Corporation’s (OCBC) O39 -

move to privatise and potentially delist Great Eastern Holdings G07 (GEH) G07 from the Singapore Exchange S68 - (SGX) will remove the last life insurer from the local bourse.

GEH is one of four domestic systemically important insurers (D-SIIs) identified by the Monetary Authority of Singapore (MAS) in September 2023, which is now facing additional capital requirements.

Two insurance-related SGX listcos remain if GEH is delisted: United Overseas Insurance U13 -

(UOI) and insurtech firm V2Y. United Overseas Bank U11 - (UOB) divested its life insurance unit, UOB Life, to Prudential in 2010. The separately-listed UOI sells general insurance, covering homes and cars, among others.

What does another delisting mean for SGX? OCBC’s announcement arrived the same week there was news that the local bourse is working to revive investor and issuer interest.

According to a May 6 Financial Times report, SGX is reviewing proposals from the Singapore Venture & Private Capital Association, which includes GIC, Temasek, General Atlantic, Warburg Pincus and KKR.

Citing anonymous sources, FT says the Singapore Economic Development Board, MAS and the Ministry of Trade and Industry are also considering the proposals.

See also: MBS operator Las Vegas Sands plans entertainment-focused expansion in Singapore

‘Not much can be done’

The delisting of companies should not be seen as a negative, says Thilan Wickramasinghe, head of Singapore research at Maybank Securities. “This is part and parcel of the market dynamically responding to the prevalent investment environment. This is how the creative destruction process works in a market-based economy. As such, in a wider sense, not much can be done to stem the flow of other delistings.”

Wickramasinghe estimates that 67% of SGX listcos trade below book value; these also have an average free float of 41%, much lower than the 90% average for the S&P 500 and 70% on the London Stock Exchange.

See also: Singapore keeps 2024 GDP growth forecast at 1% to 3%; expects gradual manufacturing and trade recovery

He adds that the low valuations on SGX are not a bug but a market feature. “Valuations will be constrained as long as insiders and large holders create an overhang to broader minority participation.”

Even efforts to get GIC to invest domestically may backfire by further reducing free float available to minorities, he says. “Rather than trying to stem the flow of delistings, which is part of market evolution anyway, SGX should increase efforts to attract new listings instead.”

Remisiers urge action

Calls to revive SGX started in 2015 when a group of remisiers signed a letter of appeal from the Society of Remisiers to then-Finance Minister Tharman Shanmugaratnam to restore confidence in Singapore equities. On Feb 13, the Society of Remisiers again published a letter urging the authorities to do more to revive interest in SGX.

CGS International analysts, led by William Tng, say similar situations in Japan and South Korea have proven that change “starts at the top”.

Japan and South Korea started efforts to improve the valuation of their listed issuers in 2022 and 2024, respectively.

According to Tokyo Stock Exchange (TSE) disclosures, 50% of the stocks listed on its Prime Market traded below book value as of Sept 30, 2022. After the start of its “Value Up” programme in 2023, this ratio improved to 36% as of April 15.

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TSE requires boards to enact policies to improve capital efficiency metrics and market valuations, especially for listcos trading below book value.

CGS’s suggestions include mandating that listcos issue dividend policies with target payout ratios and set return on equity targets after calculating their cost of capital. Listcos should also promote analyst coverage of their stock and make investor relations activities a key performance indicator for management, says CGS.

Meanwhile, SGX should consider a clear share buyback policy and cancellation of shares bought back more than those required for employee stock options schemes.

SGX should also encourage C-suite and directors of listcos to demonstrate confidence in their own company by buying shares in the open market. In this way, CGSI believes they will be incentivised to create long-term shareholder value.

Jardine Matheson Holdings, for example, requires all its executive directors to hold shares in the company worth 2.5 times their annual basic salary. Their executive chairman and group managing director must hold shares worth five times their salaries. They must retain their shares for at least two years after they leave their positions.

This contrasts with how GEH’s top management has been rewarded for years — with OCBC shares instead of their own. This has been a point of contention, as expressed by minority shareholders and even David Gerald, CEO and president of the Securities Investors Association Singapore (Sias).

Small- and micro-caps

Attracting listcos without the necessary support might change little. Wayne Lee, chairman of corporate finance firm W Capital Markets, laments the lack of market-makers for small- and micro-caps.

“Why would any sensible investor invest in any small- or micro-cap listed on the Catalist board when there is no avenue for an exit due to lack of liquidity?” he asks. “The implication is that the persistent low valuations make it very challenging for secondary fundraising of such listcos and raises the question of the purpose of listing, which would also incur the continuing listing costs.”

While Wickramasinghe is pessimistic about participation from GIC or Temasek, Lee believes some initial help will be crucial. “If our local state-owned or pension funds and private capital from family offices can invest into SGX-listed small- and mid-caps in a structured approach, it would help boost inventors’ confidence and liquidity, creating a virtuous cycle to attract higher-quality companies to list here.”

Norman Pang for Great Eastern?

Ironically, OCBC’s offer to privatise 116-year-old blue-chip insurer GEH was announced just days before another insurer made the news involving the local bourse.

On May 13, The Star reported that Malaysian insurance agency Norman Pang Group (NPG) plans to list on SGX in March 2025. According to The Star, NPG, founded in 2006, has signed a pre-IPO agreement with Singapore-based investment bank Evolve Capital Advisory and Malaysia-based private equity firm MCI Capital.

According to the namesake founder, NPG was Malaysia’s highest firstyear premium collector last year, with RM63.4 million ($18.2 million).

“We are targeting a y-o-y growth of 10% and aiming to reach a first-year premium collection of RM80 million,” says Pang, who joined Allianz in 2004.

NPG reportedly consists of “more than 380 registered and contracted agents” and Pang plans to recruit 200 new agents. 

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