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Can Singapore Exchange Limited Grow Again?

It’s been roughly two weeks since Loh Boon Chye took over as chief executive of Singapore’s only stock exchange operator, Singapore Exchange Limited (SGX: S68).

In his first results briefing for Singapore Exchange this week, he shed some light on his vision for the company’s future.

Bringing in new blood

One particularly thorny issue that is very obvious this year is the lack of any major initial public offering (IPO) in Singapore. Till date, there have only been six IPOs taking place here and all of them were listings on the secondary Catalist board instead of the Mainboard. For some perspective, January 2014 alone had five IPOs taking place here.

Loh is working to bring in much larger IPOs in the future for Singapore Exchange and he wants to attract companies from Southeast Asia and China, in particular.

Chinese companies may not strike a chord with Singaporean investors however, due to the generally poor reputation of the S-Chips (Singapore-listed firms based in China) in our local investing community. The sentiment may not be all that surprising given that S-Chips have had a long history of scandals and even outright frauds.

A financial hub

As the only developed nation and financial hub in Southeast Asia, Singapore is well-positioned to be the de-facto bourse for major companies across the region to list if they want to attract a base of international investors. In fact, Singapore has managed to attract some huge companies within Southeast Asia to list its shares here in the past. Some good examples are IHH Healthcare Bhd (SGX: Q0F)Golden Agri-Resources Ltd (SGX: E5H), and Thai Beverage Public Company Limited (SGX: Y92). But, that has not been the case in recent years.

A possible and logical reason could be a damage in reputation that Singapore Exchange has suffered as a regulator and operator due to the ignominious history of some of the S-Chips in Singapore. If so, the real challenge for Loh is to renew the level of confidence in Singapore Exchange that investors may have.

Foolish Summary

When viewed this way, the job for Loh, in my opinion, is not to focus on growing Singapore Exchange’s top- and bottom-lines – it is to focus on rebuilding Singapore Exchange’s reputation as the premier stock exchange in Southeast Asia. Revenues and profits are important, but they are a byproduct of having a great business – and Singapore Exchange needs to be great again.

 

Is there more you'd like to talk about? If so, you can come meet David Kuo and the rest of the Fool Singapore team on August 15!

The team will be at Invest FAIR Singapore on 15 August (Suntec Centre, Booth B-16), so come join us! Chat with us at our booth, and see our MAS-licensed Director, David Kuo, give his official SGX investor presentation. You won't want to miss this! Add Invest FAIR Singapore to your calendar today.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own any shares in companies mentioned above.