This is an English adaptation of a FoodBud historical article originally published on June 18, 2022.
This article was originally reported by Zhixiang.com in an interview with Xie Caihan, chief representative of the Singapore Exchange's Beijing representative office. The discussion focused on NIO's May 20, 2022 listing on SGX, the exchange's role for Chinese companies seeking international capital-market access, and Singapore's position as a bridge into Southeast Asia and global investors.
On May 20, 2022, NIO listed on the Singapore Exchange by way of introduction. The deal drew unusual attention to SGX among Chinese companies and investors.
SGX has long-standing ties with China. Its Beijing representative office, opened in 2008, was SGX's first office outside Singapore. SGX began engaging with Chinese companies around 1997, and activity picked up from 2003 as more Chinese companies sought overseas financing.
According to Xie Caihan, Greater China companies account for about 15% of the market capitalization of SGX's more than 700 listed companies. Her team spends about 70% of its time speaking with companies interested in listing or issuing debt in Singapore, and about 30% serving companies already listed there.
Xie described NIO as a landmark case for SGX. Before NIO, well-known Chinese-linked issuers on SGX included China Aviation Oil and Yangzijiang Shipbuilding, but those listings were more than a decade earlier.
NIO's Singapore listing was not a fundraising transaction. It used an introduction listing, which establishes a listing platform quickly but does not raise capital at the time of listing. Xie said SGX first engaged with NIO at the beginning of 2022, and the company listed on May 20, meaning the process took about four months.
SGX also supported NIO beyond the listing process, including publicity before and after listing and connections with Singapore government resources. Xie said SGX helped NIO explore setting up an R&D center in Singapore for product testing and product development suited to Southeast Asia.
After NIO's listing, Xie said many companies approached SGX asking how NIO listed so quickly, why it chose Singapore after already being listed elsewhere, and what incremental value SGX offered.
Xie outlined three basic ways for a company to list in Singapore:
Xie said SGX already had nearly 30 secondary-listed companies at the time, and the secondary-listing framework was not new. NIO's case, in her view, demonstrated how efficient that framework could be in practice.
Xie said SGX's role is shaped by the companies choosing to list there. For Chinese companies seeking a neutral international market to expand business, Singapore can help them reach investors and potential customers.
She identified two main types of Chinese companies for which SGX can be useful:
For companies focused only on China's large domestic market, Xie said an overseas listing may not be necessary. But for mature Chinese brands seeking to enter international markets, she described SGX as a useful launchpad because Singapore is culturally closer to China and can make the outbound step less abrupt.
Xie acknowledged that SGX's trading volume is lower than that of the U.S. and Hong Kong markets. She attributed part of this to scale: Hong Kong has more than 2,000 listed companies, while SGX has more than 700.
However, she argued that liquidity for individual companies depends on the company itself and that SGX's investor base is diversified. In her view, companies with market capitalization of S$500 million to S$5 billion can have strong liquidity in Singapore because they are considered mid-to-large companies on SGX, even if they might be smaller in other markets.
She added that companies reaching around S$7 billion to S$8 billion in valuation may enter the Straits Times Index. A S$5 billion company that grows quickly could see liquidity improve after index inclusion, attracting more passive fund attention.
SGX also uses market makers, active trader programs, and other mechanisms to improve market attention and liquidity across listed companies.
Xie said Singapore is an important overseas base for many European and Middle Eastern sovereign wealth funds, with investment decision-makers stationed there. During the pandemic, companies seeking to meet investors from countries such as Qatar or Norway could do so in Singapore rather than traveling to those countries.
She also noted that Singapore has many sovereign wealth funds, hedge funds, and institutional investors, supporting follow-on financing. Retail participation is lower than in mainland China, but online brokerages such as Futu and Tiger Brokers had become active in Singapore. Xie cited Tiger Brokers' recent financial report as showing that many newly opened accounts came from Singapore.
Before the market environment shifted, SGX had been promoting real estate investment trusts. Xie said Singapore has Asia's leading REIT market, with more diversified assets than Japan's more domestic-focused market. Beijing Hualian listed in Singapore in 2015, and from then through 2018 there was roughly one Chinese-backed real estate company listing each year.
Because real estate companies were no longer SGX's main listing target at the time, Xie said SGX was turning more attention to new-economy companies, which she said had performed well on the exchange.
She also highlighted SGX's SPAC rules, announced in September 2021. SGX had three listed SPACs at the time of the interview. Xie said Chinese issuers might find U.S. SPAC issuance difficult, while SGX supported the structure and allowed retail trading, which she said helped liquidity and market participation.
Asked whether SGX had KPI targets for the year, Xie said that if SGX could help one NIO list and then attract two or three more Chinese companies with strong brands and good compliance records, market quality would improve. She said SGX cared more about company quality than listing volume.
Note: IPO, financing, valuation, SPAC, index-inclusion, and forward-looking figures above are historical references from the June 18, 2022 source article.