Will Singapore’s Stock Market Lose More Big Companies To Privatisations?

One of the latest companies in Singapore’s stock market to undergo a privatisation exercise is OSIM International Ltd (SGX: O23). The company’s co-founder and leader, local entrepreneur Ron Sim, had announced his intention to take the company private in late March and the deal is currently in progress.

In the years since the global financial crisis, there have been multiple privatization deals for companies in Singapore’s stock market that have market capitalisations in the billions. This has caused some well-known companies to be removed from the hands of public investors. Here are just some of the billion-dollar companies in the market that have been privatised since 2009.

  • Goodpack Limited
  • Cerebos Pacific Limited
  • Asia Pacific Breweries
  • Keppel Land Limited
  • CapitaMalls Asia
  • Neptune Orient Lines Ltd
  • Tiger Airways Holdings Limited

Would even more privatisation deals be on the way in the future?

Following the aftermath of the global financial crisis, many central banks around the world have been introducing low-interest rates in the hopes of kick-starting economic growth globally or at least in their respective countries. In fact, there are some countries that are already experimenting with negative interest rates.

Can the low-interest rate environment be a fuel for privatisation deals here in Singapore since capital is now cheap to access? This seems possible as buyers of companies can easily take on debt to fund their buyout efforts.

Foolish Summary

Japan has recently started experimenting with negative interest rates, following the example of a number of countries in Europe. Will Singapore fall into a negative interest rate environment in the future? If yes, would we start seeing more privatisation deals happening in the stock market? These are interesting questions to ponder.

Potentially complicating matters is the fact that Singapore’s central bank, the Monetary Authority of Singapore, does not control interest rates here. Instead, the regulator’s monetary policy is centred on controlling changes in the exchange rate of the Singapore dollar against a secret basket of currencies.

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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 shares in any companies mentioned above.