Why Companies Don't List on SGX

The performance of Southeast Asian companies listed in the U.S. tells a complex story; while the allure of deep capital pools is strong, many have struggled to maintain investor interest post-IPO, with some experiencing significant declines from their initial valuations. Despite this, the perception remains that American exchanges provide a bigger stage and greater liquidity. This "valuation gap" creates a powerful incentive for Singapore's most promising enterprises to look abroad, leaving the local market perceived as stagnant and dominated by traditional sectors like banking and real estate.

The numbers underscore this reality. In the first half of 2024, Singapore hosted only one IPO, which raised just US$20 million, making it the worst-performing market in Southeast Asia. Meanwhile, regional exchanges are gaining ground, with Malaysia attracting 46 IPOs in 2024. This disparity highlights the intense competition SGX faces not just from global giants but also from its immediate neighbours.

Common reasons cited by companies for delisting often include the high costs of maintaining a public listing, persistent undervaluation, and the desire for greater management flexibility—all issues exacerbated by an illiquid market. For many, the benefits of being a publicly traded entity on the SGX no longer outweigh the burdens of compliance and shareholder reporting, especially when the market does not reward them with a fair valuation.

This challenge is not unique to Singapore; exchanges in London and Hong Kong have also seen a net outflow of firms. However, for a market of Singapore's size, which aims to be a hub for the broader ASEAN region, the trend is particularly concerning. It threatens to diminish the exchange's relevance and vibrancy, turning it into a less attractive venue for both local and international capital.

Recognizing the need for better market intelligence, especially for smaller companies, another initiative involves incentivizing analysts to produce more research reports on Singapore-listed firms. The goal is to improve visibility and help investors better understand the value proposition of these companies. The SGX is actively wooing around 80 to 100 private equity-backed firms from sectors like consumer and technology, hoping to convince them that Singapore offers a viable and attractive path to public markets.

These measures signal a concerted effort to reverse the tide. The focus is on making the exchange more competitive, not just against global powerhouses, but also as a compelling destination for regional companies that might otherwise be overlooked in larger markets. The success of these initiatives will be crucial in redefining the SGX's role in a rapidly evolving global financial landscape.

To truly differentiate itself, the SGX could cultivate deep expertise in specific, forward-looking sectors that align with Singapore's economic strengths, such as sustainable finance, advanced manufacturing, or health technology. By becoming the go-to exchange for these niches, it can build a unique value proposition that does not directly compete with the broader tech focus of NASDAQ or the China-centric nature of Hong Kong's market. This involves creating a supportive ecosystem of specialised analysts, targeted investment funds, and knowledgeable retail investors.

​Ultimately, the future of Singapore's public market may lie in embracing its position as a strategic gateway to ASEAN. This means strengthening connections with the region's burgeoning private markets and positioning itself as the natural and most efficient place for successful Southeast Asian companies to go public. Rather than trying to be a smaller version of New York or London, the SGX's most promising future is to become the indispensable capital platform for one of the world's most dynamic economic regions.