Lacklustre stock market expected in Singapore; overseas listings an alternative: SMCCA

WITH Singapore's uncertain economic outlook, the local stock market is expected to have a lacklustre showing this year, the Small and Middle Capitalisation Companies Association (SMCCA) said in a white paper published on Thursday.

The white paper was written based on analysis from Voyage Research.

SMCCA expects competition for conventional funding to continue to increase this year as Singapore Exchange tries to increase the number of listed companies without improving trade activities.

With the increased competition for conventional funding, alternative funding should not be ignored, said SMCCA, citing overseas listings as an option to find funding.

SMCCA further stated that Singapore companies with substantial operations overseas will have a better year than companies which depend on the domestic market.

In a separate white paper, SMCCA also provided its review of the Singapore stock market in 2014.

In terms of trading liquidity, the stock market has been in a downtrend for the past five years, with its peak trading value in October 2010.

For trading value over market capitalisation, the market has been in a downtrend since 2009.

This is in contrast with Thailand and Hong Kong, which have improved in their trading liquidity over the same period of time, said SMCCA president Tan Choon Wee.

And while Singapore performed better in terms of the number of initial public offerings (IPOs), with the number of IPOs jumping from 19 in 2011 to 27 in 2014, the total IPO offer size hit a low of S$3.2 billion over the past five years.

"This is because the increase in the number of IPOs was contributed by Catalist listings which were small in terms of IPO offer size as compared to mainboard listings," SMCCA said.

"We also see a significant amount in terms of offer size of the IPOs raised in the last few years to be from real estate investment trusts or business trusts," said Mr Tan.

"While this has been an attractive asset class for certain investors, these instruments are also not exactly equities. So if one separates out the Reits and Business Trusts, our IPO market over the last few years has not been healthy," he said.