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SINGAPORE Exchange (SGX) chief executive Loh Boon Chye wants to attract more listings from the digital and consumer sectors, and is pouring his efforts into raising liquidity so that the bourse can catch the next market upturn.
"Liquidity begets liquidity," Mr Loh told The Business Times. "Liquidity will bring us, with the right market conditions, IPOs (initial public offerings)."
Finding companies to list in Singapore has been a struggle in 2015, with no new offerings on the premium Main board so far this year and only a handful on the Catalist board. Alternative funding sources is one reason.
"There are now also more sources of capital available," Mr Loh said. "Private equity has played a role in financing that. And there are more avenues for people to raise capital."
There are also macroeconomic obstacles, such as expectations of higher interest rates and a commodity downturn, that have hit some of the core sectors for the exchange.
"I think we're probably bouncing along the bottom of the cycle," Mr Loh said. "It doesn't mean things will get a lot better quickly, but I don't think we'll get a lot worse from what we're seeing today.
"Obviously, China is undergoing structural changes to its economy with its reforms, and the US Federal Reserve has come out in its recent statements looking at international events in consideration of their rate hike cycle. So I think if the Fed starts to hike rates, that signals confidence about how the economy globally is doing."
Until market confidence returns, however, SGX is laying the groundwork with a focus on new industry sectors and on improving liquidity.
Digital technology and consumer are two areas where the exchange is hoping to help fill its pipeline now that its traditional strongholds, such as property, maritime and offshore and commodities, are in a slump.
"There are certain sectors that we are very strong in, and some of these sectors are obviously facing some headwinds because of the macro environment," Mr Loh said.
He noted that SGX has a number of outreach programmes aimed at supporting the technology and start-up ecosystem, including an investment in an equity crowdfunding platform with Clearbridge Accelerator.
"If markets are right and they develop into a business that is ready to be listed, and don't forget some of these are fast-growing companies, they could come when they're ready," Mr Loh said. "So we're not talking about multiple years."
SGX has also announced plans to expand its liquidity provider and market maker programmes.
"Once that gains more traction, I think our liquidity will improve, and I think companies will think about listing here when the conditions are right," Mr Loh said. "We have many discussions with companies that have come to us, but conditions haven't been as vibrant to allow them to list."
On the less technical front, Mr Loh has also made it a priority to reach out to other stakeholders in the market. The Society of Remisiers, in particular, had on several occasions criticised Mr Loh's predecessor, Magnus Bocker, for what they felt was a pursuit of bad policy and a failure to look after the interests of trading representatives.
Society president Jimmy Ho said that he met Mr Loh about a month after the latter took office. "He gave me a good impression in that he seemed to be keen on solving the industry's problems."
But Mr Ho said that remisiers were still hoping that the exchange would rethink the imposition of a minimum trading price on mainboard companies, or at least offer alternatives such as an over-the-counter platform if companies that failed to meet the minimum trading price had to be delisted.
Elsewhere, they can house those delisted companies, like in the US they can still go over-the-counter or Pink Sheets," Mr Ho said. "Our exchange is very blunt in that they did not offer this opportunity. Indirectly in doing their housekeeping, they are draining away shareholders' money."
Mr Loh acknowledged that the remisiers faced challenges in their daily work. SGX was committed to help them to adapt to the industry's changes and to forge a united front to grow the market, Mr Loh said.
"The industry is changing for them too, the industry is changing for us," Mr Loh said. "How do we connect in that regard to achieve, frankly, a common purpose? Everybody talks about liquidity, vibrancy, IPOs, we all get that. But it's not just with the exchange. I think you need all stakeholders to come together."
Mr Loh said that the exchange was also open to a redefinition of its regulatory role, which critics have said poses a potential conflict of interest with SGX's commercial goals. He stressed that SGX had taken great care to ensure that its regulatory function is properly carried out, but acknowledged the potential for inefficiencies.
"If indeed there are now more exchanges in Singapore, the users, stakeholders and member firms now have to be regulated not just by us, but by many other exchanges because they are members of them, and frankly that may add to inefficiency," Mr Loh said. "I think whenever as a consequence you have some inefficiency, it merits discussion."
The ultimate goal for SGX going forward is to always be of value.
"Where we need to focus on is relevance," he said. "At the end of the day, we need to be relevant, we need to be value adding, and obviously now there needs to be a focus on value creating."