Pace of SGX Delistings May Not Slow Down in 2025: Analysts
As 2024 came to a close, the trend of delistings from the Singapore Exchange (SGX) continued to outstrip the number of new listings. This has been an ongoing pattern, yet industry analysts remain hopeful. They suggest that strong global market performance coupled with efforts to rejuvenate the local equities market may serve as potential catalysts in reversing this prolific trend.
In 2024, an impressive total of 20 companies bowed out of the Singapore bourse, with a mere four new entrants taking their place. This situation is somewhat mirrored in 2023, when 25 companies opted for privatisation while only six new initial public offerings took the stage. It is evident that delistings have maintained a consistent lead over new listings.
The reasons for this trend appear to be multifaceted. Market watchers point to a combination of factors contributing to the ongoing delistings: low market liquidity, stringent regulatory scrutiny, and the ever-growing allure of private funding.
One of the primary concerns for companies on the SGX is the challenge of low market liquidity. This can dampen investor enthusiasm and limit the trading volume of listed companies. As a result, companies may struggle to garner the necessary market attention and valuation post-listing. Consequently, some businesses might consider delisting as a pathway to explore more lucrative or flexible opportunities in the private sector.
Increasing regulatory scrutiny has also been cited as a significant factor influencing the pace of delistings. While regulations are essential for maintaining market integrity and protecting investor interests, heightened scrutiny can sometimes pose operational challenges for companies. The need to adhere to comprehensive compliance and reporting requirements may deter some businesses from maintaining their listing status, enticing them to consider privatisation or seek alternative funding methods.
Moreover, the rise in appeal of private funding cannot be overlooked. The availability of substantial private capital offers companies the flexibility and resources they need without the need to adhere to the rigorous requirements of the public markets. Private equity firms and venture capitalists are often keen to invest in companies with strong potential, providing them with the financial backing they need to expand or innovate.
Despite these challenges, there remains a glimmer of optimism among market watchers. The global market’s robust performance in recent years can inspire confidence among companies contemplating an SGX listing. As global economies stabilise and strengthen, it may encourage businesses to consider the benefits of a public listing, such as increased visibility, access to broader capital markets, and enhanced credibility.
Additionally, ongoing efforts to revamp the local equities market in Singapore could also play a vital role in reversing the current trend. Initiatives aimed at bolstering market liquidity, improving investor engagement, and streamlining regulatory processes could incentivize more companies to explore listing options. With continuous development and adaptation, the SGX and its stakeholders may find innovative solutions to create a more attractive and conducive environment for new listings.
As we look forward to 2025, the landscape remains dynamic and full of possibilities. While the current pattern of delistings could persist, the convergence of favorable market forces and strategic improvements in the local equities market holds the potential to shift the tide in favor of new growth opportunities on the SGX.
The coming year will reveal whether the optimism expressed by analysts translates into tangible outcomes. For companies weighing the decision to stay listed or to explore new horizons, the evolving market conditions and regulatory framework will continue to play key roles in shaping their trajectories.
