SGX delistings: The inevitable shift in an evolving market

Rethink negative views if a listing is no longer as valued as it was in many markets

- David Gerald

Over the past decade, much has been made of the fact that several companies have opted to surrender their public status and delist their shares from the Singapore Exchange (SGX).

These departures have mainly been through takeover-cum-privatisation offers, commonly originated by major shareholders and other concert parties.

Whatever the mode of departure and motives for leaving, the news is invariably received negatively - both by the market as well as the media.

It is usually the case that SGX's critics seize upon news of these exits as yet another indication of the poor status of the local stock market.

It is only fair, however, to point out that there are several mitigating factors to consider.

The first is that delistings - whether through privatisation offers or otherwise - are not peculiar to the Singapore market.

For example, the Hong Kong Exchange in its August 2024 Report On Initial Public Offering Applications, Delisting And Suspensions said that although it welcomed 43 new listings in the eight months to Aug 31, 2024, it also saw 31 delistings.

In Nikkei Asia's July 2024 report, "Delistings outnumber IPOs by value in Hong Kong so far this year", it said depressed share prices and China's economic downturn have taken a toll on many listed companies in Hong Kong, which was triggering a wave of delistings.

"These include Chinese firms, Hong Kong firms and French top international cosmetics brand L'Occitane. Deal advisers say they are receiving more inquiries from bankers and investors on taking companies private," reported Nikkei Asia.