Just today there was an article talking about companies delisting from Singapore. Personally though, I think the reason is quite simple. SGX is only just providing a public exchange for organisations to list, but SGX is not providing any value-add to it. I'm not sure what the Hong Kong exchange provides but it's a known fact that organisations listed in the Hong Kong exchange have much higher valuations.
SGX is not helping by coming out with a super unfriendly interface that prevents investors from getting up to date information about the organisations that they are interested in. It's rather difficult to retrieve announcements or reports from the SGX website.
SGX also does not provide any visibility to the newly listed counters or make use of the information that is stored within SGX. Unless the investor is patient, it'll be quite difficult to even know the existence of a listed organisation. If you wish to further analyse it, it's even more user unfriendly.
Personally, I think SGX is making it very difficult for listed organisations to attract the investors' attention, and it's up to the individual organisations to make an effort to engage the remisiers or the brokers to "sell" their organisation. If I'm the CEO, this will come to mind. Why am I paying SGX all those listing fees anually if I need to do everything myself? If I'm not getting a valuation that is comparable to other exchanges, why should I list here?
Makes sense to you?
5 comments:
Interesting peeve, some points for consideration:
1. The exchange a stock is listed does not determine the stock's valuation. On a related note, I am not even sure it's a "fact" that HK stocks have higher valuations than SG stocks - I'll have to check that quantitatively tomorrow when I get to work.
2. Information is money. The reason you can't seem to be able to get those company info you wanted easily is simply because such info is being sold. With a Bloomberg subscription, you can easily write a program to generate a daily report on which companies have been listed/delisted today, which have changed names, which have announced dividends, etc. The catch - USD 2K per month for Bloomberg.
3. SGX website is just a front. It is being used by retail investors, which is small money. So don't expect AJAX interfaces to extract Bloomberg-like info. It ain't gonna happen, unless it's paid. The professionals who trade big money uses Bloomberg, Reuters, etc. Same thing for HK and other exchanges.
Bottomline: 90% of retail investors lose money simply 'coz they don't have realtime info like us. If you think you can be the 10% to make money in the stock market, then you really should switch to do finance full time.
Stock trading is a "loser's game" in the long run for 90% of the people. Like it or not, the wealth will stay with the 10%. (Pareto's principle cannot be violated for obvious reasons) But in a bull market like 2005-2007, people mistake luck for skill, and everyone thinks he's a genius in stock trading. Takes a year like 2008 to put everyone back to earth and get them to stop daydreaming about stocks and start doing their proper jobs.
Oh btw, companies list in exchanges to raise capital, so they will list in countries which offer the best chance to get capital. Once listed, how the stock is traded (valued by the street) doesn't affect the capital the company has already obtained.
I agree that there are other paid alternatives to such information. However, my question is why must I pay for such information?
SGX should provide a portal where such information should be readily accessible, and not through the use of ajax, make the website so unfriendly that it's so difficult to retrieve a particular company's announcements. I'm not even talking about up to date information. I'm just talking about accessing the information.
Like you said, companies list in exchanges to raise capital, so they will list in countries which offer the best chance to get capital. So how do you determine the amount of capital raised? Through valuations. If your company is valued highly, you will get more value per share for your company. You can also use the value of your company shares as a secured loan, or even pay for acquisitions. If your valuation is high, you'll issue lesser shares for your acquisition. How about rights issue?
Therefore, I do not really agree with your statement that valuations are useless for companies after listing. You'll have to look at it from a longer view perspective.
Well, some "answers" I know of:
1. You have to pay to get "such info" 'coz the financial world is mercenary. Period. Would you believe Bloomberg actually pitched to me: "USD 2K per month is nothing, all you need is one good trade to pay the entire year's subscription."
As for SGX, they make no money by offering you easy-to-find info. But if you get frustrated with their Website and take up a Bloomberg subscription, then SGX will indirectly profit from it 'coz they charge Bloomberg for info too.
If it's any consolation, the other exchanges (HK/KS/TT) are not any better (perhaps with the exception of USA but that's 'coz they're years ahead of Asia).
2. Valuation is a tricky: before a company is listed, it has no share price, so "valuation by the street" is zero. Yet to IPO, it needs a "valuation". So chicken-egg problem.
In any case, companies pick an exchange to list by:
a) Locality - a SG company typically lists in SGX as S'poreans would be familiar with the company. They won't list in HK as the IPO would not be heavily subscribed.
b) Elimination - badly run China companies got rejected by HKSE and list in SGX. Rampant in 2006-07, then many of them bankrupt in 2008 and killed those who bought their China story.
As for rights issue, it's as good as a share sale that'll just cause share dilution and the share price will tumble. A very recent case: Tokyo Electric Power (9501 on google finance), see how the price tumbled 20% recently? Why? 'coz the company market capitalisation is fixed, but upon a share sale, the number of outstanding shares increased, so the share price dropped. In short, it's still LHS == RHS.
I subscribed to behavioral finance and believe market is driven by sentiment, not valuation. In fact, the "experts" have no clue how to valuate anything: no one has a crystal ball. And share price definitely != value.
Take now, the news/experts all say global recovery is faltering, yet a bull run is on its way in the Asia markets. SGX stock went from $8 to $9.5 in the last two months. What gives? Honestly, no one out there has a clue.
(yes, the bull run should continue, lots of SG counters are breaking new highs in the midst of "bad" news)
Well, some "answers" I know of:
1. You have to pay to get "such info" 'coz the financial world is mercenary. Period. Would you believe Bloomberg actually pitched to me: "USD 2K per month is nothing, all you need is one good trade to pay the entire year's subscription."
As for SGX, they make no money by offering you easy-to-find info. But if you get frustrated with their Website and take up a Bloomberg subscription, then SGX will indirectly profit from it 'coz they charge Bloomberg for info too.
If it's any consolation, the other exchanges (HK/KS/TT) are not any better (perhaps with the exception of USA but that's 'coz they're years ahead of Asia).
2. Valuation is a tricky: before a company is listed, it has no share price, so "valuation by the street" is zero. Yet to IPO, it needs a "valuation". So chicken-egg problem.
In any case, companies pick an exchange to list by:
a) Locality - a SG company typically lists in SGX as S'poreans would be familiar with the company. They won't list in HK as the IPO would not be heavily subscribed.
b) Elimination - badly run China companies got rejected by HKSE and list in SGX. Rampant in 2006-07, then many of them bankrupt in 2008 and killed those who bought their China story.
I agree that it is right to pay for up to date and live information about companies. But I don't agree that you need to pay for such information if there is a lag time. Furthermore, before the SGX website revamp, there were no such problems in accessing these reports and announcements.
Valuation is not tricky. The most common valuation is net asset value, the amount you'll get if you sell the company. You do not pluck this value out of thin air. The other is valuation by cash flow. That one I agree is subjective. However the tradeoff is that valuation by cash flow is usually lower.
A company will list in Hong Kong if the company business operations are China based. It need not be that a Singapore company will definitely list in Singapore. If their business operations are more China based, it makes sense for them to list in Hong Kong as there won't be exchange rate risk. Likewise, if the company is US based, they would prefer to list in US.
I did read up on Richard Thaler's books and I do believe that stock prices depend on many external factors, many of which has nothing to do with the business operations itself. However, not everything is based on sentiment.
Your example on the rights issue is the correct behaviour. The incorrect behaviour would be that the price rose after the rights were issued, even though there were no other news that justify the rise in valuation.
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