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on september 16, local time, singapore's second minister of finance xu fengda announced that singapore is ready to make "bold reforms" to the regulatory structure to revive the sluggish stock market. xu fengda is currently chairing a special task force to study ways to strengthen the stock market. he said that one area being explored is to simplify the prospectus disclosure requirements for issuers of initial public offerings (including secondary listings).

the singapore exchange is facing unprecedented challenges due to low trading volumes, a decline in ipos and a series of delistings in recent years. according to pwc research, the exchange was at a low level globally in terms of both the number of ipos and the amount of funds raised last year, with only seven ipos. in the first half of this year, the number of ipos on the singapore exchange was only one.

singapore's major announcement

on september 16, local time, singapore's second finance minister xu fengda announced that singapore is ready to make "bold reforms" to its regulatory structure to revive its sluggish stock market.

xu is reportedly heading a task force to study ways to strengthen the stock market. he said the group's goal is to remove outdated rules, encourage high-quality companies to join the listing ranks, and improve liquidity.

the task force includes representatives from the central bank, temasek holdings, singapore exchange and other industry stakeholders as calls grow to boost the local stock market, which has been plagued by underperformance, shrinking market capitalisation and sluggish trading volumes.

xu fangda said that relevant measures will be implemented in stages before the end of the 12-month evaluation period, which may include cutting listing costs and expanding the types of stock derivatives.

“given the global headwinds faced by other exchanges and the increasing competition in the field, it will not be easy to revive our stock market,” xu said at an event in singapore on monday. “but we are ready to make changes and try new ideas. because if we don’t try, our chances of success are zero.”

xu said one area being explored is simplifying prospectus disclosure requirements for issuers of initial public offerings (including secondary listings). other possible changes include incentives to encourage listings and ways to reduce listing costs, as well as expanding research coverage.

in early august this year, the monetary authority of singapore announced that it had set up a review team to explore how to strengthen the development of the singapore stock market. the working group will complete the report within 12 months and propose relevant measures.

the working group is led by xu fengda, and the other nine members are chia kee chen, managing director of the monetary authority of singapore, dilhan ram, executive director and ceo of temasek, lee quan teck, chairman of enterprise singapore, koh boon hwee, chairman of sgx, fang zhangwen, chairman of the singapore economic development board, lai chong han, permanent secretary (development) of the ministry of finance, lim ming yan, chairman of the singapore business federation, parekh, partner and head of asia, australia and new zealand of tikehau capital, and goh yew juan, chairperson of the singapore institute of management’s governing council.

the panel is tasked with coming up with a series of concrete initiatives over the next 12 months to enhance the competitiveness and vitality of singapore's stock market.

the review panel will have two major focus areas: the corporate and market workstream will look at addressing market challenges, promoting listings and promoting market revitalization; the regulatory workstream will focus on strengthening the regulatory system to help market growth and build investor confidence. through these two workstreams, the review process will involve stakeholders with expertise and experience in different areas of the capital markets, including corporate finance, investment banking, asset management, legal services and corporate governance. the review panel will recommend a series of measures to strengthen singapore's stock market and complete a report within 12 months.

why

in fact, judging from the performance of singapore's stock index, the singapore straits times index (sti), the trend is not weak. on september 13, the singapore straits times index once rose to 3572.84 points, setting a new high since june 2018, with a cumulative increase of 10% this year.

but singapore's stock market is facing unprecedented challenges due to sluggish trading volumes, a decline in the number of ipos and a series of delistings in recent years.

the exchange was at the lower end of the global rankings in terms of both the number of ipos and the amount of funds raised last year, at seven deals and $300 million, respectively, according to research by pwc.

in the first half of this year, there was only one ipo on the singapore exchange, raising us$20 million. during the same period, six singaporean companies went public in the united states, raising us$103 million.

it is worth noting that the number of delisted companies on the singapore exchange is on the rise. in 2023, more than 20 listed companies delisted, causing the total number of listed companies on the singapore exchange to decrease from 651 at the end of 2022 to 632 at the end of 2023.

the singapore stock market was originally intended to be positioned as a regional capital market for south asia and southeast asia, attempting to attract ipos from companies in indonesia, malaysia, india and other places. however, in recent years, the stock markets of other countries in the region have developed very rapidly.

in 2023, the indonesian stock exchange ranked among the top five in the world in terms of the number of initial public offerings (ipos); last year, the number of ipos in india reached 234, the highest since 2017, an increase of 56% from 2022.

"there are growing concerns that even some private capital may leave singapore and move closer to faster-growing markets, especially india," said a singapore-based venture capital management partner who is consulted by the government and the singapore exchange.

in fact, the singapore government has taken a series of measures to support corporate listings and stock market development, including setting up a cornerstone fund in cooperation with temasek to support ipos of high-growth companies, introducing new corporate structures and stock categories to promote listings, and increasing research coverage of listed companies. these measures aim to attract more high-quality companies to list in singapore and create a more dynamic and liquid market environment.

some analysts pointed out that singapore should strengthen its regulatory framework to accommodate more innovative corporate structures and financing models. for example, creating a new board with tailored rules for high-growth technology companies, similar to nasdaq in the united states. this could allow for more flexible listing standards around financial prerequisites and governance without neglecting safeguards to protect investors.