Hong Kong has been the world’s hottest IPO market for 2 years in a row, raising a total of US$53.2 billion last year in a wave that included foreign companies like Russia’s UC Rusal. Singapore raised US$6 billion; its largest foreign IPO was the US$224 million offere by Norway’s STX OSV Holding Ltd.
The Singapore Exhance is focusing on niches. One is business trust. While Hong Kong began listing real-estate investment trusts in 2005, it limits public listings by other kinds of trusts. The Singapore Exchange has been marketing the structure aggressively. Singapore is a preferred destination among investors for REITs, compared with Hong Kong. While Hong Kong only has 7 listed REITs, wit ha total of US$13.5 billion in market capitalization, Singapore has 25 valued at US$30 billion. Analysts say that the size of Singapore’s listed REIT sector makes the city-state a natural choice for others. 6 to 7 REITs are looking to list in Singapore and could raise between US$3 billion to US$4 billion in the next 12 months.
Other areas the Singapore Exchange has heavily marketed are the potentially lucrative, but often speculative, areas of technology and biotechnology. The exchange is also pitching its closeness to rapidly growing Southeast Asian economies. Last month, SGX, along with exchanges based in Malaysia, the Philippines and Thailand, annouced a plan to develop a trading link by the end of 2011. The arrangement would enable investors to buy or sell shares listed on any of the exchanges while settling the transactions in their own markets.
The Hong Kong market is deeper. In Singapore, apart from REITs and property companies, there are few US$1 billion-plus IPOs. Fore this reason, there are strong arguments for jumbo overseas companies seeking an Asian listing to choose Hong Kong.