Last year, the Singapore Exchange (SGX) saw only eight new initial public offerings (IPOs) that raised around US$1.2 billion (S$1.6 billion) in proceeds (More options for S'pore companies pursuing IPO, Jan 26).

This accounted for less than 0.5 per cent of the worldwide total of 2,388 IPOs that collectively raised US$453 billion.

Companies list either because they can get much better valuations as a publicly listed company, or because of the ease with which they can raise additional capital to advance growth prospects.

If neither of these conditions is met, the listed company is better off being privatised, and that is what has been happening to the Singapore market over the past several years.

Many good-quality SGX-listed companies, such as Roxy-Pacific Holdings and SingHaiyi Group, have been taken private or have announced plans to go private as the market did not accord them the valuation they truly deserve, resulting in the hollowing out of the Singapore market.

So, Singapore needs to first address why fundamentally sound companies want to delist from SGX.

Also, more than half of SGX-listed companies are trading below book value. Many are in fact giving decent dividend yields of 3 per cent or more.

Why then are investors not participating in this attractively valued market? In the 1990s and 2000s, Singapore had a roaring stock market and provided much-needed liquidity for many small and medium-sized enterprises to grow and thrive.

Over time, however, many SGX-listed companies ran into trouble and had trading suspended or even ended up being wound up. The large sums of money that were wiped out have shaken the confidence of thousands of investors.

We need to rebuild this confidence and provide an undertaking that investors' interests will be well protected, adequate recourse will be provided and timely action will be taken against fraudulent companies.

S. Nallakaruppan
President
Society of Remisiers (Singapore)

Source: https://www.straitstimes.com/opinion/forum/forum-investor-confidence-in-sgx-needs-to-be-restored