SGX, NASDAQ to set up dual listing bridge for firms to access both markets

Key Concepts

• Dual Listing Bridge: A partnership between the Singapore Exchange (SGX) and Nasdaq allowing companies to list on both markets through a single Initial Public Offering (IPO).
• High-Growth Companies: Companies, particularly from Asia, seeking to go public and expand their investor base.
• Market Competitiveness: Measures taken by Singapore to enhance the attractiveness and performance of its equities market.
• Equity Market Development Program: Initiatives by the Monetary Authority of Singapore (MAS) to fuel recovery and growth in the equities market.
• Investor Relations and Corporate Strategy: Areas of focus for grants aimed at helping companies communicate their growth stories and valuations.
• Geopolitical Turmoil and Tech Unicorns: Current global economic conditions influencing investment decisions.
• Governance: The importance of strong corporate governance for long-term value creation.
• Capability Development: Enhancing the skills and knowledge of companies and fund managers.
• Shareholder Engagement: The necessity of actively engaging with investors.
• Implementation Committee: A body established to oversee the execution of proposed measures for the equities market.

Dual Listing Bridge: SGX and Nasdaq Partnership

The Singapore Exchange (SGX) and U.S.-based Nasdaq are establishing a "landmark dual listing bridge." This initiative, expected to go live by mid-next year, will enable companies to list on both markets through a single Initial Public Offering (IPO). The primary objective is to streamline regulatory requirements for high-growth companies in Asia seeking to go public, thereby making Singapore's equities market more competitive.

Key Features and Benefits:

• First of its kind partnership: This collaboration is a novel approach between SGX and Nasdaq.
• Expanded investor access: It provides high-growth Asian firms with more options to go public and reach investors across both regions.
• Reduced friction and complexity: The partnership aims to simplify the process of listing and reduce associated complexities.
• Attracting larger companies: The bridge is designed to attract companies with a market capitalization of at least $2 billion.
• Sector diversification: It is expected to draw investors from key growth sectors, including technology, which are currently less represented in the Singapore market. This expanded sector coverage is anticipated to attract new investor segments and support the growth of equity trading, research, and related professional services.

Measures to Enhance Singapore's Equities Market Competitiveness

The dual listing bridge is part of a broader set of measures recommended by a review group tasked with making Singapore's equities market more competitive.

Specific Initiatives:

• Increased IPOs: SGX has seen a significant increase in IPOs, with 90 deals in the current year, up from a previous period.
• Equity Market Development Program: The Monetary Authority of Singapore (MAS) has appointed a second batch of asset managers to further fuel market recovery. These include firms like Over Asset Management and BlackRock.
• Funding Allocation:
  • A further $2.85 billion will be allocated to attract more investors.
  • The U.S. will allocate $30 million to fund two new grants.
• Grant Program: These grants will support companies in strengthening their investor relations, corporate strategy, and financial management. The aim is to help companies effectively communicate their growth stories and valuations to potential investors, thereby encouraging investment.
• Implementation Committee: An implementation committee will be established to ensure the effective rollout of all proposed measures.

Expert Analysis: Professor Lawrence Loh

Professor Lawrence Loh, Director of the Centre for Governance and Sustainability at NUS Business School, provided insights into the significance of the SGX-Nasdaq dual listing bridge and other market development initiatives.

Significance of the Dual Listing Bridge:

• Gateway to both markets: Professor Loh described the bridge as more than just a gateway; it's a "gate opener" that allows companies to list on Nasdaq and SGX simultaneously.
• Attracting new listings: This arrangement is expected to attract companies that might not have previously considered listing in Singapore or Nasdaq, by offering the "best of both worlds" – access to global markets and a strong Asian presence.
• Focus on innovation and growth sectors: The initiative is particularly aimed at making the market more attractive for sectors like technology and real estate, which are areas of innovation.

Challenges and Considerations:

• Geopolitical turmoil and tech unicorn valuations: In the current global economic climate, Professor Loh highlighted the need to focus on fundamental economic growth and inflation as key determinants for equity markets. Companies listing in both markets will need to navigate these factors.
• Governance and Capability Development:
  • Long-term value creation: Professor Loh emphasized the essential role of governance in creating true long-term value.
  • Capability development: Companies need to develop their capabilities, particularly in understanding the listing requirements and structures of different markets (e.g., U.S. market structure).
  • Shareholder engagement: Engaging investors effectively and presenting a compelling growth story is crucial.

Role of Appointed Asset Managers:

• Propagating and propelling market development: The second batch of asset managers appointed under the Equity Market Development Program is expected to help propagate and propel the development of the equities market.
• Jump-starting the market: This initiative is seen as a "forceful green face" and a "jump-start" to galvanize the market, leading to increased trading volumes and activity, and hopefully, value creation.

Priorities for the Implementation Committee:

• Execution and momentum: Professor Loh stressed that the implementation committee's top priority should be execution to ensure the momentum of these initiatives is maintained.
• Continuous study and adaptation: The committee needs to conduct continuous studies of the market and adapt strategies as needed, recognizing that these are not static formulas.

Conclusion

The establishment of the SGX-Nasdaq dual listing bridge, coupled with various market development initiatives, signifies a strategic effort by Singapore to bolster the competitiveness and attractiveness of its equities market. By facilitating dual listings, providing financial support, and focusing on capability development and governance, Singapore aims to attract high-growth Asian companies, diversify its sector representation, and enhance investor participation in its ecosystem. The success of these measures will hinge on effective execution and continuous adaptation to the evolving global economic landscape.