Once dubbed a ‘zombie’ exchange, this Asian stock market is trying European-style trading to reinvent itself
The Singapore Exchange has become the first exchange in Asia to offer trading in “structured certificates” — but analysts say it’s not clear if the new offerings will benefit SGX significantly or boost its trading volumes.
Structured certificates are financial instruments issued by a third party, that are based on underlying assets — their returns depend on the performance of the asset, which can be a single stock or an equity index.
It’s still “too early to say whether there will be demand for the specific securities introduced,” said Thilan Wickramasinghe, Maybank’s head of research in Singapore.
Singapore began offering listed structured certificates on Aug. 30, with its inaugural issue being one linked to Hong Kong-listed shares of Chinese tech giant Alibaba Group Holding.
“We think this market will take a period of months … to figure out what investors’ appetite are for various names,” Michael Syn, senior managing director and head of equities at the SGX told CNBC’s “Street Signs” in late August.
“So tech names, Hong Kong names, U.S. names, Japanese names. I think there’s lots of possibilities there. But the first few, I think, appeal quite broadly.”
Serene Cai, SGX’s head of securities trading, told CNBC on Tuesday that since the launch a month ago, the exchange has seen “increased interest from both issuers and distributors keen to incorporate this product into their offerings.”
SGX sees this as a positive development, she said, as this broadens the range of investment options available to the market.
Will it revive SGX?
The SGX has sometimes been deemed “boring” and “unexciting.” It was once even referred to as a “zombie” bourse due to its thin trading volumes.
Even before the pandemic, the exchange more saw delistings than listings. From 2009 to 2019, there were 302 delistings, while only 279 companies were listed, according to the finance minister at that time, Tharman Shanmugratnam.
Singapore’s IPO market has seen listings worth only $18.6 million so far this year, putting it on track to have the worst showing since 2011, according to aggregator Inside Venture Capital.
SGX’s move to broaden its equity-linked product base “could drive incremental market interest,” including offering depository receipts and structured certificates, Wickramasinghe told CNBC.
“This will give investors a wider choice of market and thematic exposure, beyond what has been available before,” he added. “We have observed success in SGX’s derivatives business where exposure to a wide variety of geographies and underlying asset classes are offered in an Asian time zone.”
In the near term, structured certificates are not likely to have a material impact on the earnings of SGX, he said, but they could give exposure to underlying securities in other markets, with easier and more convenient access through SGX, Wickramasinghe said.
Once dubbed a ‘zombie’ exchange, this Asian stock market is trying European-style trading to reinvent itself
The Singapore Exchange has become the first exchange in Asia to offer trading in “structured certificates” — but analysts say it’s not clear if the new offerings will benefit SGX significantly or boost its trading volumes.
Structured certificates are financial instruments issued by a third party, that are based on underlying assets — their returns depend on the performance of the asset, which can be a single stock or an equity index.
It’s still “too early to say whether there will be demand for the specific securities introduced,” said Thilan Wickramasinghe, Maybank’s head of research in Singapore.
Singapore began offering listed structured certificates on Aug. 30, with its inaugural issue being one linked to Hong Kong-listed shares of Chinese tech giant Alibaba Group Holding.
“We think this market will take a period of months … to figure out what investors’ appetite are for various names,” Michael Syn, senior managing director and head of equities at the SGX told CNBC’s “Street Signs” in late August.
“So tech names, Hong Kong names, U.S. names, Japanese names. I think there’s lots of possibilities there. But the first few, I think, appeal quite broadly.”
Serene Cai, SGX’s head of securities trading, told CNBC on Tuesday that since the launch a month ago, the exchange has seen “increased interest from both issuers and distributors keen to incorporate this product into their offerings.”
SGX sees this as a positive development, she said, as this broadens the range of investment options available to the market.
Will it revive SGX?
The SGX has sometimes been deemed “boring” and “unexciting.” It was once even referred to as a “zombie” bourse due to its thin trading volumes.
In 2022, there were more delistings than IPOs on the exchange.
Even before the pandemic, the exchange more saw delistings than listings. From 2009 to 2019, there were 302 delistings, while only 279 companies were listed, according to the finance minister at that time, Tharman Shanmugratnam.
Singapore’s IPO market has seen listings worth only $18.6 million so far this year, putting it on track to have the worst showing since 2011, according to aggregator Inside Venture Capital.
SGX’s move to broaden its equity-linked product base “could drive incremental market interest,” including offering depository receipts and structured certificates, Wickramasinghe told CNBC.
“This will give investors a wider choice of market and thematic exposure, beyond what has been available before,” he added. “We have observed success in SGX’s derivatives business where exposure to a wide variety of geographies and underlying asset classes are offered in an Asian time zone.”
In the near term, structured certificates are not likely to have a material impact on the earnings of SGX, he said, but they could give exposure to underlying securities in other markets, with easier and more convenient access through SGX, Wickramasinghe said.
More at https://www.cnbc.com/2023/09/28/asian-stock-market-is-trying-european-style-trading-to-reinvent-itself.html