* SGX becoming niche bourse for REITs, oil & gas sector
* Share trading down by a third for the year to date
* Has had fewer IPOs than Thailand and Bangladesh this year
* Spate of company takeovers lead to delistings
* Clearing fee cut among moves SGX has made to woo investors
By Anshuman Daga
SINGAPORE, June 26 (Reuters) - The uphill battle faced by
Singapore's stock exchange to improve its trading volumes
appears to be getting only tougher.
This year has seen a sharp drop-off in IPOs and some big
deals take a chunk of popular shares off market - both
developments adding to the pain caused by a penny stock scandal
last year and prompting the bourse to arm itself with new
incentives to win back companies and investors.
Lofty ambitions to be one of Asia's pre-eminent stock
markets saw Singapore Exchange Ltd make an
unsuccessful $8 billion bid for Australia's ASX Ltd in
2010. SGX has also always been the most international of Asia's
bourses with some 40 percent of its listed companies from
outside the city-state, many from China.
But experts say Singapore's stock market is becoming a niche
player - popular for yield plays such as real estate investment
trusts (REITs) and business trusts, as well as the mineral, oil
and gas sector but not too much else.
"They have had a pretty bad run," said Philippe Espinasse, a
former investment banker and author of "IPO: A Global Guide",
adding that the bourse had to attract more types of deals.
"It's a market that has seen so many of these (REIT and
business trust) deals and very little else that people tend to
think that it's all that it can take."
Recent trading numbers have been ugly. In the first five
months of the year, share trading on SGX fell by a third to
$92.4 billion, making it the second-worst performer among
Asia-Pacific bourses after Thailand, data from the World
Federation of Exchanges show. By contrast, Hong Kong Exchanges &
Clearing Ltd saw a 9 percent increase to $614.6
Much of the decline stems from an October crash in penny
stocks, the most actively traded shares on the bourse. That
scared off retail investors, who are estimated to account for
just 9 percent of trade compared to 25 percent in Hong Kong.
Seeking to win investors back, SGX Chief Executive Magnus
Bocker has cut clearing fees on stock trades and signed up more
than 10 financial firms to act as market makers, giving them
rebates on clearing fees as incentives to boost liquidity. The
bourse is also amending secondary listing rules to attract more
DELISTINGS AND FEW IPOS
But while these measures are seen as part of the solution,
market participants do not expect them to revive activity
Those efforts are also being undermined by a record $13
billion of takeovers of Singapore listed companies so far this
year - as owners, put off by the decline in trading volume and
encouraged by cheap credit opt to take firms off market.
Major delistings include shopping mall operator CapitaMalls
Asia, which had accounted for 5 percent of the Strait Times
Index's trading value, after property developer
CapitaLand Ltd offered S$3.2 billion ($2.6 billion) to
buy out minority shareholders.
A consortium led by state investor Temasek Holdings
also lifted its stake in commodities trader Olam International
Ltd to 80 percent from around 52 percent, leading to a
sizeable reduction in the company's free float.
"I see the emergence in taking companies off the exchange
but I don't see the new ones coming to replace," said investor
Key to improving SGX's fortunes, experts say, will be
winning big listings beyond the REITs it is known for and
attracting growth stocks like Hong Kong.
But Singapore's IPO market is having its slowest start since
the first half of 2012, managing to list just six companies from
January till June 20, fewer than Thailand and Bangladesh which
have had nine each, and far behind Hong Kong which has had 30,
according to Thomson Reuters data.
Proceeds from Singapore IPOs have fallen 72 percent to $774
million so far this year from the same period a year earlier,
reducing SGX's market share in Asia Pacific to 3.3 percent from
The last big Singapore IPO over $1 billion was a REIT in
February 2013 while the only big name of late to announce a
listing is Russia's Gazprom - but only a dual listing, raising
Lawrence Wong, head of listings at SGX, told Reuters the
bourse is seeing strong interest from IPO aspirants and
highlighted the exchange's moves to enhance the quality of the
market to both issuers and investors.
But the kind of mid-sized Chinese firms that had flocked to
SGX till a few years ago have been put off due to depressed
valuations, the lack of retail investor interest, and they now
have better options in Hong Kong and China.
Attracting listings from other parts of Southeast Asia has
also become more challenging as neighbouring countries step up
efforts to develop their own bourses.
"If Singapore could be the one go-to place for investing in
Southeast Asia, that'll be great, but it just isn't going to
happen," said Mark Matthews, head of Asia research at Bank
($1 = 1.2503 Singapore Dollars)
(Editing by Denny Thomas and Edwina Gibbs)