It cited low trading volume as one of the reasons behind the move.
Dual-listed Fortune REIT will delist from the mainboard of the Singapore Exchange Securities Trading (SGX-ST) to primarily eliminate additional administrative overhead and costs of compliance with Singapore regulatory requirements, a filing with the Singapore Exchange (SGX revealed.
Primarily listed on the mainboard of the Stock Exchange of Hong Kong (HKSE), Fortune REIT’s principal place of business is in Hong Kong given that all of its properties are located in Hong Kong, and the unit price is also quoted in HKD on both the HKSE and the SGX-ST.
“Fortune REIT now has a closer nexus to Hong Kong since the conversion, and the SGX delisting will better reflect the investor profile and geographical asset profile of Fortune REIT,” the firm explained. The firm revealed that as of 19 June, the number of units listed on the SGX-ST is approximately 374.9 million, which comprises about 19.4% of Fortune REIT’s total units in issue.
It also observed a continuous migration of unitholders from Singapore to Hong Kong since the conversion, given the flexibility in the transfer of units between the HKSE and the SGX-ST.
“The trading volume of the units on the SGX-ST has been generally thin. The trading volume of the units on the HKSE significantly exceeds the trading volume on the SGX-ST,” Fortune REIT highlighted.
For illustration purposes, it noted how the average daily trading volume of the units for the 12 months from June 2018 to May 2019 was approximately 2,443,000 units on the HKSE, but only approximately 62,000 units on the SGX-ST.
“[ARA Asset Management] believes that the consolidated trading of the units on the HKSE arising from the SGX delisting will increase the liquidity of such units on the HKSE, thereby improving the effectiveness of any future capital raising activities,” the firm said, adding that management believes that Fortune REIT’s primarily listing on the HKSE is sufficient enough to meet its future debt and equity fund raising requirements.
In connection with the SGX delisting, ARA Asset Management has also applied for and obtained in-principle approval from the Monetary Authority of Singapore (MAS) for the withdrawal of authorisation of Fortune REIT as an authorised collective investment scheme. The management will cease to hold its capital markets services licence for real estate investment trust management granted by the MAS with effect from the MAS deauthorisation and the delisting of the units from the SGX-ST.
Fortune REIT will issue further announcements to inform unitholders of the timetable for the SGX delisting.
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