Tuesday, November 26, 2013

SGX

SGX: SGX and China Securities Regulatory Commission (CSRC) had established a direct listing framework, which aims to facilitate Chinese firms seeking a listing on the Singapore board. In the past, firms required to set up an overseas entity as a layer between the company and investors as part of the listing process. Under the framework, the CSRC will review and provide Chinese enterprises with a better understanding of the requirements and platform to list on SGX, while SGX will reach out to intermediaries and issuers on the process and requirements. On the legal end, applicants must comply with all relevant laws and regulations in China, as well as all requirements and regulatory standards of Singapore and SGX. The due diligence processes conducted on both sides is expected to provide a greater assurance to investors. While the new framework is a step in the right direction to boost our capital markets, we caution that it does not guarantee the quality of companies that seek listings here. Investors may still be marred by the fallout of S-chips when corporate scandals were brought to light in 2007, when accounting irregularities were raised, missing husband-and-wife management team after corporate bankruptcy and on-going concerns were some of the issues raised. Valuations are attractive for SGX, with a forward P/E of 21.2x on generally low expectations for a 3% growth in earnings, compared to regional peers Hong Kong Exchanges' 33.7x P/E on 9% earnings growth, and Bursa Malaysia's 23.3x.

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