Can SGX Win the World Largest IPO?

In what is believed to be the world largest IPO ever, Saudi Arabia oil company Aramco is seeking to list 5 percent of the company, which is valued at USD2 trillion, in both domestic and international stock markets. The move is part of the plan by the Saudi kingdom to diversify its economy and reduce the reliance on the black gold. International stock exchanges from New York, London, Hong Kong and Singapore have been vying to win the prized trophy of winning the IPO. Can SGX win the game?

To put things in perspective, the chance of Singapore Exchange securing the prestigious secondary listing in SGX is remotely small. The rate of success is probably 5% and I would be extremely surprise if SGX could pull it off. This is because if the intention of Saudi Arabia is to seek an international listing to diversify income, then market size is significant. Logically speaking, the natural choice would be New York, London or Beijing.

In my opinion, the New York Stock Exchange is the most likely destination for the Aramco IPO. London offers the prospect of being the major investment gateway to European market but Brexit had totally changed the game. As for Beijing, the stock exchange is not accessible to foreign investors and for Saudi Arabia to list Aramco there would defeat the purpose of a secondary listing. Thus, United States’ New York Stock Exchange is in pole position to land the blockbuster IPO of the century.

SGX

If the conclusion is forgone, why would SGX waste time in making pitches to the Saudi Arabian? In my humble opinion, it is probably because the stock exchange is trying to send a statement of intent.

Wave of privatizations

Since CEO Loh Boon Chye took over the helm from the late Magnus Bocker in 2015, SGX has witnessed a devastating wave of privatization led by a slew of huge delistings. Big names like OSIM, SMRT, NOL, Tiger Airways, Super Group, Keppel Land, Popular Holdings, Sim Lian and Eu Yan Seng have been delisted from the Singapore Exchange. There were many more of course. On looking back, there were various contributing factors for the exits, such as depressed valuation and listing fees. Regulatory requirements played a part as well.

For property developers like Keppel Land, Popular Holdings and Sim Lian, government regulations like Qualifying Certificate (QC) rule provided the motivation to privatize. Under QC rule, listed developers are [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

Read my other SGX stock research articles:

  1. Investing in SGX shares
  2. SGX’s 1Q2017 results
  3. SGX to revise minimum trading price rule
  4. SGX plunged from $15.90 to $6.82

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Updated: March 20, 2019 — 2:47 pm

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