SGX confident China IPOs will still flow here

THE Singapore Exchange (SGX) is confident that Chinese firms will continue to seek listings in Singapore, despite speculation that China is trying to steer them towards listing in Shanghai or Shenzhen instead.

It says demand for capital among China firms is so great that it would be impossible for the two domestic mainland bourses to cater to them all.

SGX's executive vice- president and head of listings, Mr Lawrence Wong, told The Straits Times yesterday that he does not believe that China regulators 'are trying to stop companies from coming out, as this will only create problems for themselves and problems for the companies'.

He was commenting on a recent report that Beijing had introduced an unofficial policy to allow China firms to list in Hong Kong only if they are seeking to raise more than US$1 billion (S$1.51 billion) or planning a simultaneous listing in China.

Some market watchers have said this could hit the number of China firms listing in Singapore too.

Mr Wong said: 'To raise US$1 billion will require a firm to have a US$3 billion to US$4 billion market capitalisation. Most China companies won't fall into that category. Imagine the consequences if all these companies try to go into the two bourses of China?'

Since last September, China firms have needed clearance from the China Securities Regulatory Commission in order to list overseas. This has led to fears that Beijing may impose tough hurdles before allowing them to do so.

But the impact is yet to be felt, as those China firms which already had initial public offerings (IPOs) under way restructured their operations before the new rule kicked in.

Mr Wong is convinced that Beijing will arrive at an amicable solution that will mean China firms can still list in places such as Singapore.

'I have a very high regard for the Chinese authorities. They know what they are doing. They have to look at different things, inside and outside the country and make the right policies.'

The SGX has continued to talk to China firms interested in a listing in Singapore 'either directly or through intermediaries'.

'China being China, it will continue to be an important source of listings for us and for a lot of other stock exchanges. Definitely, it will be on our radar screen,' he said.

Last year, China IPOs accounted for about half of the new listings on the SGX.

Mr Wong also noted that Yangzijiang Shipbuilding, which raised almost $1 billion in proceeds from its flotation, is the largest China firm to list here.

The counter started trading yesterday. 'It speaks a lot of our ability to take on large IPOs,' Mr Wong said.