Singapore’s equity reforms may boost IPO activity

Analysts expect interest from financial services, tech, and green energy companies.

Public listings in Singapore could increase by as much as 50% this year as a result of the country's recent stock market reforms, experts said.

Ooi Chee Keong, a partner and head of capital markets at accounting firm Forvis Mazars in Singapore, said they have received more inquiries about initial public offering (IPO) prospects after the Monetary Authority of Singapore announced reform measures on 21 February.

“The tax incentives and the Equity Market Development Programme will lower IPO costs, improve valuations, and enhance proceeds from public offerings, making the Singapore Exchange a more attractive destination for listings,” he said in an emailed reply to questions.

Christopher Wong, a client portfolio strategist at Fidelity International Ltd., cited similar equity market reforms by South Korea and Japan in the past. 

“In both markets, there were increases in new listings since reforms were announced,” he said in an email.

Singapore was the worst-performing market for IPOs in Southeast Asia in the first half of 2024. The Singapore Institute of Advanced Medicine Holdings Pte. Ltd. was the only company to have completed a mainboard listing during that time.

To boost the stock market’s attractiveness as a listing destination, Singapore’s central bank announced a 20% corporate tax rebate for new primary listings, a 10% rebate for secondary listings, and a $5b stock market development programme to encourage investment in Singapore-listed stocks beyond index components.

Chee Keong expects interest from financial services, tech, green energy, and healthcare and biotechnology. “Improved market conditions may attract more companies from these sectors to list on the Singapore Exchange,” he said.

Jason Saw, group head of investment banking at CGS International Securities Singapore Pte. Ltd., also expects consumer discretionary and manufacturing companies to consider listing on the exchange.

More measures are needed to attract listings in technology, consumer discretionary, healthcare, and other structural growth sectors, Wong said, noting that Singapore’s market has traditionally been weighted toward banks and real estate investment trusts.

Saw said Singapore is likely to attract companies from Thailand and Indonesia. He also expects some Chinese companies to list, especially those seeking to raise foreign capital for expansion.

Chee Keong expects stock market reforms to benefit both institutional and retail investors. Institutional investors would have more capital to deploy, whilst retail investors would gain more investment opportunities and potentially better returns, he added.

Undervalued semiconductor, consumer, and healthcare companies would also benefit from the reforms, Saw said.

Rick Chan, managing partner of Forvis Mazars in Singapore and head of audit and assurance for the Forvis Mazars Asia-Pacific region, said the stock exchange should require IPO applicants to present detailed forecasts and scalability plans to improve valuations and attract more investors. 

“Companies should articulate their growth strategies, including market expansion plans, product development roadmaps, and potential mergers or acquisitions. ,” he said in an emailed reply to questions.

Valuation reports for IPO listings should also be mandatory because they could help set fair issue prices, he added.

Meanwhile, Saw stressed that SGX must also carefully assess the companies seeking to list. 

“We should watch out for higher quality companies to come to market. Look out for strong management and strong fundamentals. I think the last thing we want is a company that just comes to the market with no real reason to list except to exit,” he said.