On the advantages of listing in Singapore
As regional exchanges become more mature, which factors make SGX a standout proposition for Asian companies seeking to list?
LOH BOON CHYE: First, Singapore is an international business hub; it is well connected, is a signatory to many free trade agreements and boasts an integrated infrastructure for businesses. Singapore also offers a broad base of investors. We have traditional asset managers, pension funds and sovereign wealth funds, forming a large wealth management centre. Second, our investors understand the regional markets. Of the almost 740 companies listed on SGX, over 10% are headquartered in ASEAN member states. Take the example of ride-hailing companies, such as GO-JEK or Grab; investors in this region not only understand the concept, but also understand how such companies will operate differently in Vietnam, versus Myanmar or Singapore. Lastly, SGX is a multi-asset exchange, covering equities, fixed income, commodities, derivatives and foreign exchange (FX). Investors come to us to access different asset classes, as well as Asia.
What can be done to attract more listings from high-value companies in the burgeoning tech industry?
LOH: It’s important to profile companies before they enter the public market, which involves SGX introducing pre-IPO investors to these companies. After listing, research is an important part of our offering. Another of SGX’s attraction is our strong partnerships. For example, we have an alliance with Nasdaq, creating an east-west corridor and allowing companies to list here and eventually in the US. We also have a partnership with Tel Aviv Stock Exchange, which enables us to create a bigger pipeline of tech companies from Israel.
In light of falling market capitalisation and equities trading and clearing revenues, which products are likely to drive growth on the bourse?
LOH: Equities and derivatives account for 90% of our business top-line revenue. To explain why this is important, let’s use the analogy of an aeroplane. If we envision the two engines of the plane as being equities and derivatives, then the body of the plane would be market data and indexes, since these are required for any trading on any exchange. If there is a global slowdown and we have only one engine, such as equities, the plane can still fly, but it will have to land sooner. With two engines, it can fly further and for a longer period of time. In addition, our FX market is growing strongly. We are now the largest exchange in Asia in terms of listed FX futures. In the near future, exchange-traded FX futures will co-exist with over-the-counter FX trading. I also predict further growth in commodities, alongside a strong demand for equity index derivatives and the introduction of more net total return products.
What role do you see SGX playing in supporting the national goal of establishing Singapore as the regional infrastructure centre?
LOH: SGX can play a role in enabling infrastructure financing through our debt securities and business trust structures platform. By providing sector research and corporate profiling and access for our listed companies, we can help both institutional and retail investors to better understand the infrastructure sector.
To what extent is SGX prepared for digital disruption from blockchain, cryptocurrencies and other innovative technologies?
LOH: Such technology is set to shape the evolution of capital markets by extending the multi-user exchange into a digital marketplace for capital powered by technology. We would like to see a free flow of exchange between capital and data. Increasingly, we are also seeing companies wishing to stay private longer, hence we need to be involved in the whole value chain of capital raising, including private markets. One way we do this is via our investment in CapBridge, a co-investment syndication platform for mid-to-late stage growth companies. This online platform allows for quicker and more frequent recycling of capital, as well as the creation of liquidity for early investors, family-owned offices and employees. This effort has now being advanced by blockchain technology – CapBridge 1exchange (“1X”) is the world’s first regulated private securities exchange that leverages public Ethereum blockchain to provide investors with a unique trading platform to buy and sell private securities. At the same time, SGX has also invested in iSTOX, a next-generation capital markets platform that is exploring the use of security token offerings that are backed by assets, not just equity and debt.