At least five large firms from China’s mainland and Hong Kong have signaled intentions to launch on the Singapore Exchange (SGX) over the next 12 to 18 months.
These businesses include a Chinese energy company, a healthcare group, and a Shanghai-based biotech company. The companies are also exploring share placements or dual listings.
People familiar with the matter said the move is part of a broader push by Chinese firms to gain a foothold in Southeast Asia. They attempt to find alternative markets as the trade war between China and the United States rages on.
The US and China have long been locked in a tit-for-tat tariff war. Towards the peak of the trade war, the US slapped tariffs of up to 145% on certain Chinese goods while China issued tariffs of up to 125% on American imports. Although the two sides recently agreed to a temporary 90-day break, questions linger about the future of the trade relationship.
Analysts say this uncertainty is leading Chinese companies to seek new gateways to global markets, with Singapore rising to the top of the list.
Singapore Exchange draws major Chinese firms for listings
The Singapore Exchange has been unable to contest Hong Kong’s reign of listing the best and most profitable IPOs. So far this year, SGX has seen just four listings.
In comparison, 71 new listings have been issued in Hong Kong since the start of 2024 (which still holds its title as the largest market in Asia for IPOs).
Jason Saw, head of investment banking at CGS International Securities, said that Chinese interest could change the current situation. He explained that after the US raised tariffs on China, inquiries about Singapore Exchange (SGX) listings had “shot through the roof.”
Pol de Win, senior managing director at SGX, echoed the sentiment, adding that Singapore’s role as a regional hub is increasingly valuable for companies seeking stable, neutral markets outside the US and Hong Kong.
Singapore boosts market to attract global companies
Singapore is taking steps to develop its stock market better to lure more foreign companies. Earlier this year, the government unveiled a 20% tax rebate for primary listings to cut costs and make companies more likely to opt for SGX.
Additional measures to encourage listings and trading volumes will likely be implemented later this year. Those efforts are part of Singapore’s broader push to position itself as Southeast Asia’s preeminent financial hub.
Singapore’s political stability, which may be a potentially attractive draw for companies cautious of geopolitical risk, would be an additional factor in its favor, EY’s Asia Pacific IPO Leader, Ringo Choi, said.
Still, challenges remain. Singapore’s stricter listing requirements and conservative investor base could hold it back from narrowing the gap with Hong Kong.
A Singapore-based tech executive, speaking anonymously, said the country needs to streamline its listing process, particularly for tech startups. The executive added that most regional startups are also based in Singapore, which makes sense for an IPO. However, the executive continued that the current constraints would have to be relaxed for this to happen.
China has long pushed for closer economic ties with the region, especially as it feuds with Washington on multiple fronts. Chinese firms see Southeast Asia as a fast-growing market that is home to a growing middle class and an expanding appetite for consumer goods.
Listing in Singapore allows Chinese companies to raise money locally and increase their brand name. This twofold incentive is what makes Singapore so appealing.
Hong Kong is still the preferred offshore destination among Chinese companies, but Singapore’s incremental reforms and offerings make it increasingly attractive for big players.
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Source: https://www.cryptopolitan.com/chinese-firms-turn-to-singapore-for-ipos/