Singapore’s stock market is a well-known institution. It is Asia’s second-oldest stock exchange and was first traded on January 27, 1838. The structure and organization of the Singapore Stock Exchange (SGX) has changed many times over the years. This blog post will examine how SGX was created and what makes it unique today.
We will also be discussing some of the key trends that have shaped the exchange in the last few decades. We’ll also give an overview of current liquidity and trading volumes.
What is the Singapore Stock Market?
Before we get into the history of the SGX formation, let’s briefly describe what the Singapore stock exchange is.
Singapore Exchange Limited is an investment holding company that provides services in securities and derivatives trading and other services.
The Company was established under the Companies Act 1965 on May 1, 1997 as a public limited company by shares. Its registered office is at Level 33, The Business Centre, 50 North Bridge Road, Singapore 048621. Since January 2, 2004, SGX has been listed on the mainboard of the Singapore Exchange. It is divided into two segments: the Securities & Derivatives Trading segment, and the Others Segment.
- SGX has several divisions that are responsible for specific businesses.
- SGX ETS: Provides global trading access to the SGX market where 80 percent of customers are outside Singapore.
- SGX DT (Derivatives Trading): provides derivatives trading.
- SGX ST (Securities Trading),: Offers securities trading.
- SGX DC (Derivatives clearing): subsidiary for clearing operations and settlement operations.
- SGX AsiaClear offers clearing services for OTC oil swaps and forward freight arrangements.
- SGX Reach is an electronic trading platform.
Central Depository Pte Ltd is a subsidiary that provides securities clearing, settlement, and depository services.
Asian Gateway Investments Pte Ltd: wholly-owned subsidiary
Companies listed on SGX fall under one of two categories: companies listed on SGX Mainboard or SGX NASDAQ. A company must meet certain requirements to be listed on the mainboard. Listing on NASDAQ does not require the fulfilment of additional conditions.
After extensive market research and public consultation, SESDAQ was replaced by the SGXCatalyst on 26 November 2007.
The name “Catalyst”, which is a combination of “List” and “Catalyst”, refers to the idea that the Catalyst Board could be used to stimulate growth after listing.
Catalyst is different from SESDAQ in that it uses a sponsor system for determining a potential company’s suitability to be listed and also acts as a corporate advisor for advising on corporate governance and listing issues.
System of trading
In August 2004, the exchange launched SGX QUEST (SGX Execution and Quotation System). The exchange uses the system for securities and derivatives trading.
Singapore Exchange Launches New Trading System. The Singapore Exchange has launched a new electronic trading platform to allow investors to trade stocks more efficiently. This is part of an effort to make Singapore’s markets more competitive with other stock exchanges around the globe.
Hours of operation
Time to start and time to finish
- Pre open 8:30 am to 8:51 am
- The market opens at 9:00 AM and 11:59 PM.
- Pre-open (Midday Break) 12:00 pm-12:59 am
- The market opens at 1:00 PM-5:00 PM
- Pre-close 5:00 PM 5:05 PM
- Close to 5:06 pm
The Third Listed Exchange in Asia-Pacific
SGX was listed on 23 November 2000. It is the third Asian-Pacific exchange to be listed via a private placement and a public offering.
New legislation made it possible to list SGX. This allowed for an initial public offering (IPO) on the stock exchange. Similar to IPOs in other countries, the IPO allows companies to raise capital through the sale of shares. Small businesses that have limited access to the financial markets can now have greater access to capital. It also increases liquidity because there will be more buyers than one or two large institutions willing to purchase stocks.
Singapore Exchange: Companies listed
There were 754 listed companies on the Singapore Exchange (excluding GDRs and Hedge Funds) as of February 2017. The market capitalization was SGD 977.097 trillion (roughly US $700 B).
- Domestic Listings 483
- (Excluding China)
- China Listings 123
- GDRs, Hedge Funds and Debt Securities 2
- Total Listings 773
Traders rejoice: Singapore’s Stock Market is Back on Lunch Break
Singapore Exchange’s headquarters in Singapore. SGX will resume a daily, one-hour lunch break in November.
Photo by Ore Huiying/Bloomberg News Singapore traders won’t be chained to their desks when they eat lunch.
The Singapore Exchange, also known as SGX, announced earlier this week that trading would resume at noon and end at 1 p.m. each day. This move will be in effect from November and is part of an exchange operator’s efforts to increase trading volume and interest in its market. In March 2011, the exchange ended its lunch break.
While lunching out is no longer a popular option in the United States during the work week, it is still a common practice in Asia. Not only is it a great way to network, but also because of its tradition of going out for lunch. Many brokers from Hong Kong protested the Hong Kong stock exchange’s decision to reduce its two-hour midday trading time to 60 minutes in 2012.
Stock exchanges in Tokyo, Malaysia, and China also offer midday lunch intermissions. The Indonesia Stock Exchange offers a 90-minute break every day. On Fridays, the intermission can be extended to 2 1/2 hours.
Still, trading continues on the exchanges of South Korea, Australia, and India. There is no major Western stock exchange that has a midday break. The New York Stock Exchange in the United States, discontinued its lunch break in 1871.
Singapore GDP (Billion), National Currency
Historical Stock Market Cap Historical total Singapore stock market in billions of Singaporean currency. This value is normalized with the WorldBank data. Normalization is done using the Straits Times Index. It measures the performance of the top 30 companies on the Singapore Exchange.
Below is a table that compares historical stock markets. It includes their capitalization and the number of stocks traded. The average daily trading volume and exchange rates are also included. The last column shows whether each country has an open market system.
Singapore Total Market Cap (Billion), National Currency
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Historical Total Assets of Central Bank Historical total assets of the Central Bank of Singapore, in billions of local currency. This information is derived from the central bank balance sheets of each country. It is possible for the total assets to be displayed as zero or minus, which indicates that no data exists. In such cases, both the modified version and the projected annualized market returns will be treated as the original.
Singapore Total Assets of Central Bank (Billion), National Currency
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Original and modified historical ratio of Total Market Cap over GNP (%) Singapore’s current ratio of total market cap over GNP is 196.98%. The most recent 20-year high was 354.46%, while the lowest was 103.45%. The expected annual return of 0.94% is assumed that the ratio will fall to the 20-year average of 212.3% in the next 8 years.
The modified version shows that the current TMC/(GDP + Total assets of Central Bank) ratio in Singapore is 91.31%. The 20-year high was 177%, while the 20-year low was 53.86%. The expected annual return for the future is 2.4% if the ratio falls to its 20-year average of 110.37% in the next 8 years.
This chart shows the historical breakdown of the original TMC/GDP ratio and the modified TMC/(GDP + Total assets of Central Bank) ratio.
Singapore Original and Modified Ratios of TMC to GDP (%)
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These historical valuations have been used to divide the market into five areas:
- Ratio = Total market Cap/GDP Value
- Ratio > = 149% Significantly Undervalued
- 149% Ratio = 191%
- 191% Ratio = 234% Fair Valued
- 234% Ratio = 276% Moderately Overvalued
- Ratio > 276% Significantly Overvalued
What is the current situation (2021-08-16)? Ratio = 196.98%. Based on these modified historical values, we have broken down market valuation into five areas:
- Ratio = Total market cap/(GDP + Total assets of Central Bank) Valuation
- Ratio > = 77% Significantly Undervalued
- 77% Ratio = 99% Moderately Undervalued
- 99% Ratio = 121% Fair Valued
- 121% Ratio = 143% Moderately Overvalued
- Ratio > 143% Significantly Overvalued
What are our current circumstances (2021-08-16)? Ratio = 91.31%,
Global tech rally misses Singapore’s stock market of the ‘old economy’
Singapore SINGAPORE– Late last month, Singapore’s investors flocked to a little-known company that debuted on the local exchange–hoping to capture some of the magic of high-flying technology stocks that the city-state’s market has long been missing.
Nanofilm Technologies International raised over 470 million Singapore Dollars ($340 million) to make its debut on October 30, making it the largest IPO on the Singapore Exchange (SGX).
Its share price jumped to SG $3.00 in November, more than 15% above the IPO price of SG $2.59, bringing its market capitalization up to SG $2.59 trillion. It closed last week at SG $2.93.
The tech startup is a nanotechnology provider that provides solutions for smartphones and other electronic devices. This contrasts with Singapore’s poor stock market performance. As of Nov. 12, the benchmark Straits Times Index had fallen 16% since the start of the year, far behind Asian peers like South Korea’s Kospi (+13%) and Japan’s Nikkei Average (+8%), and India’s BSE-Sensex (+5%).
The slump can be attributed to the fact that Singapore is not one of Asia’s most important economic hubs. This is because it lacks fast-growing tech stocks, such as Meituan, Alibaba Group Holding and Amazon.com. These companies have benefited from digitalization driven by pandemics.
It has been difficult for Singapore to attract investor interest due to the obsession with tech stocks elsewhere in the world. The largest capitalized companies on SGX are those from legacy sectors such as finance, transport, real estate, and leisure.
Singapore’s dependence on the outside environment for its export-oriented economy means that it is particularly vulnerable to global shocks such as the COVID-19 pandemic.
“Singapore doesn’t have a large domestic consumption base. According to Krishna Guha, a Jefferies analyst, the pandemic-induced restrictions imposed on travel, tourism, retail, and construction had a disproportionate effect.
The share prices of many of the 30 companies that make up the Singapore stock index have plunged due to the global health crisis. This index tilts heavily toward banks, which have seen their earnings suffer from low interest rates and are now facing rising non-performing loans due to the COVID downturn.
In addition, the Singapore stock exchange has had low liquidity since the start of the pandemic. This led many local companies to choose foreign markets for their initial public offering. These include Sea, an online gaming and ecommerce company that went public on the New York Stock Exchange in 2017 and is now Southeast Asia’s most valued company. Razer, a gaming hardware manufacturer, is also on the Hong Kong stock exchange.
This is why Nanofilm’s IPO in Singapore was so significant, despite being relatively small compared to other major listings in the South Korean or Chinese markets.
Xu, the founder of Nanofilm and executive chairman, stated in a statement that Nanofilm was the first deep-tech company to list on SGX’s mainboard in many years. However, he firmly believes we won’t be the last… SGX is the listing hub for many more deep-tech companies in the future. Recent market statistics indicate that the company may take advantage of the rising activity from small investors as investors look for other returns in the low interest rate environment. According to the SGX, Singapore-listed stocks saw a net increase in retail funds of SG $2.1billion over the three months ending October, and a net outflow from institutional investors of SG $940m.
Max Loh, Ernst & Young’s managing partner for Singapore & Brunei, stated that the Nanofilm IPO could “catalyze more interest in other listing destinations choosing SGX.” It would be a boon for the future if we could achieve a sustainable ripple effect and sector cluster effect. It will take time before Singapore becomes a tech stock exchange. Justin Tang, head of Asian research at United First Partners, told Nikkei that SGX would not become a Nasdaq stock exchange with one tech IPO. However, the company’s market cap is SG $2billion, which is still a small amount in the world of listed technology stocks. When it comes to stocks such as Alibaba, tech investors will likely continue to invest in the Nasdaq and Hong Kong. Tang referred to the Nasdaq, which is home to companies such as Amazon, Netflix, and Facebook. He said that it was about the whole ecosystem. This includes the colleges that have produced so many founders, the industry and company cultures, openness, exchange and way of thinking, and access to venture capital. It also covers the infrastructure and the size of the addressable market. The future of the Singapore market will depend on the reopening of the global and local economies. The coronavirus situation in Singapore has stabilized with only a few new cases being reported over the past few days. Singapore is also speeding up its border openings.
Carmen Lee, OCBC Investment Research’s head of research, stated in a recent report that sectors which ride the global economic cycle “could be renewed interest once economic activities resume fully,” as more countries join Singapore in recovering from different stages of COVID-induced shut downs.
Analyse of Past Earnings Growth
Trend in Earnings: G13’s earnings declined by 3.8% annually over the last five years.
Accelerating Growth: G13’s earnings growth in the past year (38.4%) is higher than its 5-year average of-3.8% per annum.
Comparison of Industry and Earnings: The G13’s earnings growth in the past year (38.4%) was lower than the hospitality industry (66.5%).
Financial Position Analysis
Short Term Liabilities: G13 has short-term assets (SGD3.3B), which exceeds its short-term liabilities of SGD423.8M.
Long Term Liabilities
Stability and growth of payments
Stable Dividend: G13 has paid a dividend for less than 10 years, and payments during this period have been volatile.
Growing Dividend: G13 only paid a dividend for nine years and has not increased its payments since.