After reaching a close to two-year peak in May, Singapore’s stock market has had a lacklustre June. It dipped marginally, by close to 1.0%. This mostly reflected other major markets globally, with US’s S&P 500 and Hong Kong’s Hang Seng Index (HSI) experiencing similarly tepid results gaining 0.3% and losing 0.2% respectively.
In Singapore, politics was a highlight in the past week. With Prime Minister Lee Hsien Loong having to respond to strong criticisms from his own siblings. While not yet a political issue, this has definitely gripped the front pages of our newspapers and drawn differing thoughts among locals.
One area that seems to be back in interest is property. We covered this area in our column earlier in June – you can read this in the link below. Since then there has been more interest with related property firms UOL buying a significant stake in UIC from Haw Par Corporation in exchange for new shares in UOL. All three companies ended the week higher.
GLP, on the other hand, tanked close to 5.3% on Friday (23 June 2017) after Financial Times reported that potential bidders for GLP has dropped out.
Our focus for this week is on secondary listings in Singapore. As a financial hub, Singapore attracts several such listings from companies who have listed in their home markets but wish to gain exposure to a wider spectrum of investors.
Big companies that have operations in Singapore could also see it a viable opportunity to have a secondary listing here to tap on local investors, who will be familiar with the company, as well as on our international exposure to global financial players. Another reason is for regional companies, predominantly from Southeast Asia and China, to list on the Singapore Exchange (SGX) rather than its local stock exchange to leverage on Singapore’s exposure to global financial players.
While the SGX leverages on this to attract secondary listings onto its exchange, it has to continue to step up its game to offer compelling reasons for companies to consider a secondary listing on SGX – this is because China’s stock market is rapidly advancing and it is integrating Hong Kong to become its main gateway into global financial markets as well as the rapidly advancing Southeast Asia economies and their stock exchanges.
For SGX to remain a relevant destination for such listings, Singapore cannot afford to lose its standing in the international marketplace.
Update: There has been some chatter in the past for SGX to allow dual-class listings, and they embarked on a public consultation for this earlier this year. However, for secondary listings, SGX released an announcement on 28 July stating that under its existing framework, it already allows for companies with dual class shares to list on the exchange under a secondary listing. They will be referred to an independent Listings Review Committee in addition to having satisfy SGX’s suitability criteria.
This means companies like Facebook and Alphabet (Google’s parent company) with three classes of shares with different voting rights, and Alibaba, which has only listed shares with limited voting rights, to list in Singapore (if they even wish to!) Dual class shares often allow founders to hold more voting rights and allow them to exercise more control over the company.
This may be a good or bad thing, and investors need to understand that they do not have equal voting rights if they invest in these companies.
#1 Prudential PLC (SGX: K6S)
At a market cap of close to $82 billion, Prudential the largest capitalised company on SGX. Listed on the SGX on 25 May 2010, it is quoted in a foreign currency like many other secondary listings in Singapore, the US Dollar in this case. The company also has other secondary listings globally – in London and New York – in addition to its primary listing in Hong Kong.
While it is not actively traded in Singapore, investors should note that the market cap of this financial services giant is more than 1.5 times than that of Singapore’s largest bank – DBS. Singaporeans should also be very familiar with Prudential as it is a recognisable financial services companies in Singapore – selling insurance and other products.
It has also constantly delivered stable results over the years – achieving an operating profit of approximately $7.6 billion in FY2016. Over the past 52 weeks, its share price has increased close to 28.4%. In addition, it also distributes an annual dividend yielding over 2.4%.
#2 Top Glove (SGX: BVA)
Top Glove is the world largest rubber glove manufacturer. Included on SGX on 28 June 2016, it has a primary listing on Bursa Malaysia. The main reasons it cited for its secondary listing in Singapore was to tap on SGX’s investor reach and new potential fundraising activities in the future.
On Friday (23 June 2017), it announced a placement of five million existing and traded original shares. This is due to its secondary listing in Singapore, where the company had undertaken to place not less than $20 million of shares in the company. The company has a market capitalisation of $2.3 billion.
With nearly 30 factories and the ability to produce over 48 billion pieces of gloves, Top Glove has a global market share of more than 25% and a geographically diverse presence in more than 195 countries.
The company has also delivered solid results, with increasing sales volume uplifting revenue by 15.7% to RM2,506.8 million in its latest 3QFY2017 results. Earnings per Share, however, dipped 20.8% to 18.7 sen, due to stronger US Dollar and lower raw material prices.
In the past 52 weeks, its share price has increased by 10.9%, and it has also been distributing dividends yielding close to 2.6%.
#3 Hongkong Land (SGX: H78)
With a market capitalisation of close to $24.3 billion, Hongkong Land is another large real estate company with a secondary listing on SGX. Further, Hongkong Land is also on the Straits Times Index (STI), comprising the top 30 stocks in Singapore. Its primary listing is on the London Stock Exchange.
Part of the Jardine group, Hongkong Land has the strong backing of a global conglomerate. With properties across Hong Kong, Macau, Singapore, Jakarta, Hanoi, Bangkok and other regions, Hongkong Land manages a portfolio of approximately 8,200 sq ft premium office, retail and hospitality space. In Singapore, it owns One Raffles Link (100%), One Raffles Quay (33%) and Marina Bay Financial Centre (33%). It also has projects in China, Indonesia, Philippines, Thailand.
Over the past 52 weeks, Hongkong Land has delivered a strong 26.7% return. It too distributes a dividend, which yielded investors close to 2.6%.
#4 Fortune REIT
Fortune REIT has a primary listing in Hong Kong. With a secondary listing on SGX in Hong Kong Dollars, this REIT offers investors access to a portfolio of 17 retail properties in Hong Kong and 2,713 car parking spaces.
Also Read: How REITs In Singapore Performed In 2016
This REIT converted its primary listing in Singapore to a secondary listing in 2015. Fortune REIT, the first to hold assets in Hong Kong, holds In FY2016, increased its revenue and distribution per unit by 5.0%.
Over the past 52 weeks, it has delivered a return of over 16.4%, and an annual yield of 5.1%.
4 Stocks This Week is not a recommendation from us to buy or sell any of these stocks. For investors who are keen to find out more, you should continue researching about them before making your investment decisions.
Bonds and Fixed Income