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Is SGX nobody’s child?

Frankie Ho
Frankie Ho • 5 min read
Is SGX nobody’s child?
It became apparent in recent days that reviving the moribund local equities market ranks low on the government’s to-do list. Photo: Alber Chua/The Edge Singapore
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It’s never good for a country’s stock market when private companies contemplating going public think a rival exchange elsewhere is a better place to list on. 

It’s just as bad when a government shuns the stock market of its own country and opts instead to invest state resources in other places. 

Unfortunately, such is and will remain the predicament of the Singapore Exchange S68 -

(SGX) after it became apparent in recent days that reviving the moribund local equities market ranks low on the government’s to-do list. 

Temasek Holdings, wholly owned by the Ministry of Finance, is the latest to chime in on a recent public discourse on what else could be done to resuscitate the stock market, which has seen only one IPO so far this year.  

Despite renewed calls for the government and its investment entities to do more to help shake off SGX’s stupor, a senior Temasek executive told a media briefing on July 9 that the Singapore state investor has no plans to do so. Temasek’s primary focus, according to the executive, is to generate sustainable long-term returns. 

That’s all well and good in and of itself. But one can infer from the executive’s remarks that such returns are elusive in the local stock market. If there’s really good money to be made on the Singapore bourse, surely Temasek would have no hesitation in pumping money — and more of it — into more SGX-listed companies.

See also: Breakout time

The same can be said of GIC. Some in the investment community have been hoping the sovereign wealth fund could channel a part of Singapore’s foreign reserves to local stocks in a bid to jolt the market back to life. But such hopes were put to rest when Second Finance Minister Chee Hong Tat told parliament on July 2 that getting GIC to invest in SGX-listed companies is not the way to go. 

Instead, getting a pipeline of good companies to list on SGX is a better approach, according to Chee. Again, a quick read between these lines will lead one to the conclusion that the lack of good-quality companies — and hence the lack of decent returns — is the reason for the Singapore market’s sad state of affairs. 

On that note, those who are against the idea of GIC getting into Singapore stocks are not wrong in saying this would be akin to throwing good money after bad. In any case, the reluctance of GIC and Temasek to help prop up the local market shouldn’t come as a surprise. 

See also: Singapore stock benchmark heads for 2018 high on earnings hopes

Chee’s boss, Prime Minister Lawrence Wong, had already told lawmakers in May that the challenges facing the Singapore bourse — such as better returns from other asset classes given higher-for-longer interest rates — are also affecting other equities markets and are unlikely to go away anytime soon.

While Wong’s assessment is true, there’s no denying that other stock markets in Asia are generally in better shape than Singapore’s.  

Our closest neighbour, for instance, saw its market cap soar above RM2 trillion ($573.4 billion) in May for the first time and stay above that level the following month. For a country that faced acute political uncertainty not that long ago and with one of the worst-performing currencies in Asia last year, Malaysia hasn’t done too badly for investors lately. 

Hong Kong, too, is starting to stir, after being written off by many investors following widespread pro-democracy demonstrations by its citizens some years back. A renewed commitment by China to shore up the former British colony’s fortunes is beginning to rub off on its equities market, which had more than 70 new listing applications in the first half of 2024, up some 50% from the second half of last year. 

The point here is that while a number of markets in the region have had their share of misses in recent years, they are starting to pick up. Singapore, on the other hand, has been largely listless for many years and is still not showing any sign of stirring. That’s despite a slew of initiatives by SGX to try to inject excitement into the market. 

Meanwhile, delistings continue to outnumber IPOs on SGX and more homegrown private companies are heading abroad to list. 

In addition, many companies already listed here are stranded with such depressed valuations that it no longer makes commercial sense for them to raise additional funds after their IPOs. Some are also feeling the heat from activist shareholders demanding a shakeup of their boards and even business models. 

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These issues afflict not only business owners and investors but also, if left unresolved, other stakeholders including stockbrokers, research analysts, corporate lawyers, auditors and investment bankers. All these roles are at risk if there’s no light at the end of the tunnel for the stock market. 

Sadly, the reluctance of the government and its investment arms to get more involved in the equities market here only reaffirms what many investors have long come to terms with: That SGX will carry on languishing and remain a cog in the wheel even as Singapore continues to pull ahead as a global financial hub.   

The writer is a former financial journalist and runs an investor relations consulting practice. He is also a part-time business journalism lecturer at a Singapore university. All views expressed are solely his. 


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