Singapore's Stock Market: A Troubled Sea of Delistings and Low Confidence
May 16, 2025, 11:24 pm
Singapore's stock market, once a beacon of opportunity in Asia, now resembles a ship adrift in troubled waters. The recent trend of delistings has raised alarms, with eight companies already announcing their exit this year. The tide may rise to a dozen as more firms consider buyout offers. This wave of departures is a clear signal: confidence in the Singapore Exchange (SGX) is waning.
Trading volumes are modest, prices are subdued, and the market is struggling to find its footing. While some might argue that low prices are a silver lining in a volatile world, the reality is stark. The SGX is grappling with serious issues that hinder its potential.
At the heart of the problem lies low valuations. Two-thirds of the over 600 companies listed on the SGX are trading below their net tangible values. This is particularly true for small and mid-cap stocks, many of which are profitable and offer attractive dividends. Yet, their stocks languish at significant discounts compared to what they could fetch in private deals or on other exchanges.
Why is this happening? The answer is low liquidity. Trading volumes on the SGX are not just lower than larger markets like Hong Kong and the US; they also lag behind regional players like Kuala Lumpur and Jakarta. The Singapore market is dominated by sectors such as property, banking, and conglomerates, leaving little room for growth in technology stocks. In contrast, Wall Street thrives on tech giants, while Hong Kong boasts a vibrant ecosystem of new economy players. Without a robust tech sector, Singapore struggles to attract the next wave of innovators.
The SGX's regulatory framework, while robust, can be burdensome for smaller companies. High compliance costs can deter firms with thin margins, pushing them toward delisting. If their stocks attract little interest, the exit door becomes increasingly appealing.
What can be done? Some industry insiders suggest that the SGX needs to adopt bolder measures. The recent S$5 billion initiative to inject liquidity is a step in the right direction, but it may not be enough. There are calls for government-backed funds, like the Government of Singapore Investment Corporation (GIC), to invest in SGX-listed stocks. This could enhance the appeal of the exchange and attract more listings.
Additionally, easing restrictions on short selling and margin trading could stimulate liquidity. Proper regulation, limited to accredited investors, might reignite the market's animal spirits. The Securities Investors Association (Singapore) could play a role in certifying these investors, ensuring that the market remains stable while encouraging participation.
The issues of delistings, low liquidity, and a lack of new IPOs are serious concerns for Singapore's financial landscape. However, these challenges are not insurmountable. They require actionable solutions that address the core problems. Half-hearted measures will not suffice. The criticism that current initiatives are too few and too late is valid.
The SGX must act decisively. It needs to foster an environment that attracts both local and regional companies. This means creating a marketplace that is not only compliant but also conducive to growth.
Investors are looking for opportunities, and Singapore has the potential to be a prime destination. The city-state's strategic location, strong regulatory framework, and established financial infrastructure are assets that should not be overlooked. However, without a vibrant market, these advantages will remain untapped.
The Singapore stock market stands at a crossroads. It can either continue down the path of decline or take bold steps to revitalize itself. The current landscape is challenging, but with the right strategies, it can emerge stronger.
Investors, companies, and regulators must work together to breathe new life into the SGX. This means embracing innovation, reducing barriers, and fostering a culture of growth. The time for action is now. Singapore's stock market can rise again, but it requires a collective effort to navigate the stormy seas ahead.
In the end, the future of the SGX depends on its ability to adapt and evolve. The market must shed its old skin and embrace new opportunities. Only then can it reclaim its status as a gateway to Asia, a vibrant hub for investment and innovation. The clock is ticking, and the world is watching.
Trading volumes are modest, prices are subdued, and the market is struggling to find its footing. While some might argue that low prices are a silver lining in a volatile world, the reality is stark. The SGX is grappling with serious issues that hinder its potential.
Low Valuations: The Anchor Weighing Down the Market
At the heart of the problem lies low valuations. Two-thirds of the over 600 companies listed on the SGX are trading below their net tangible values. This is particularly true for small and mid-cap stocks, many of which are profitable and offer attractive dividends. Yet, their stocks languish at significant discounts compared to what they could fetch in private deals or on other exchanges.
Why is this happening? The answer is low liquidity. Trading volumes on the SGX are not just lower than larger markets like Hong Kong and the US; they also lag behind regional players like Kuala Lumpur and Jakarta. The Singapore market is dominated by sectors such as property, banking, and conglomerates, leaving little room for growth in technology stocks. In contrast, Wall Street thrives on tech giants, while Hong Kong boasts a vibrant ecosystem of new economy players. Without a robust tech sector, Singapore struggles to attract the next wave of innovators.
Regulatory Burdens: A Heavy Weight
The SGX's regulatory framework, while robust, can be burdensome for smaller companies. High compliance costs can deter firms with thin margins, pushing them toward delisting. If their stocks attract little interest, the exit door becomes increasingly appealing.
What can be done? Some industry insiders suggest that the SGX needs to adopt bolder measures. The recent S$5 billion initiative to inject liquidity is a step in the right direction, but it may not be enough. There are calls for government-backed funds, like the Government of Singapore Investment Corporation (GIC), to invest in SGX-listed stocks. This could enhance the appeal of the exchange and attract more listings.
Additionally, easing restrictions on short selling and margin trading could stimulate liquidity. Proper regulation, limited to accredited investors, might reignite the market's animal spirits. The Securities Investors Association (Singapore) could play a role in certifying these investors, ensuring that the market remains stable while encouraging participation.
The Path Forward: Navigating the Storm
The issues of delistings, low liquidity, and a lack of new IPOs are serious concerns for Singapore's financial landscape. However, these challenges are not insurmountable. They require actionable solutions that address the core problems. Half-hearted measures will not suffice. The criticism that current initiatives are too few and too late is valid.
The SGX must act decisively. It needs to foster an environment that attracts both local and regional companies. This means creating a marketplace that is not only compliant but also conducive to growth.
Investors are looking for opportunities, and Singapore has the potential to be a prime destination. The city-state's strategic location, strong regulatory framework, and established financial infrastructure are assets that should not be overlooked. However, without a vibrant market, these advantages will remain untapped.
Conclusion: A Call for Bold Action
The Singapore stock market stands at a crossroads. It can either continue down the path of decline or take bold steps to revitalize itself. The current landscape is challenging, but with the right strategies, it can emerge stronger.
Investors, companies, and regulators must work together to breathe new life into the SGX. This means embracing innovation, reducing barriers, and fostering a culture of growth. The time for action is now. Singapore's stock market can rise again, but it requires a collective effort to navigate the stormy seas ahead.
In the end, the future of the SGX depends on its ability to adapt and evolve. The market must shed its old skin and embrace new opportunities. Only then can it reclaim its status as a gateway to Asia, a vibrant hub for investment and innovation. The clock is ticking, and the world is watching.