SGX invests in Smartkarma to advance investment research on Singapore-listed firms
Singapore
SINGAPORE Exchange (SGX) has taken another step toward greater involvement in driving investment research on Singapore companies - this time, through a strategic investment in Smartkarma, which runs a digital global investment research network.
The Singapore-based firm's network can provide investors with an additional source of research and data, and offer listed companies a direct touchpoint with investors. SGX's investment will give Singapore-listed companies and bond issuers access to Smartkarma's network.
It is the first such investment between a bourse and Smartkarma, under which the fintech firm's existing investors, including Sequoia India and Wavemaker Partners, have joined SGX in the round of investment.
Smartkarma's co-founder and CEO Raghav Kapoor said the investment, a "seven-figure sum", serves as "a next step in ensuring a vibrant financial research ecosystem".
He disclosed that Smartkarma will soon launch Corporate Solutions, an extension of the Smartkarma platform, which was developed after a successful pilot led by SGX. Corporate Solutions targets investor-relations firms and C-Suites in listed companies globally.
SGX's investment comes at a time when research houses have been trimming their staff, resulting in less investment research being available to investors, especially in small- to mid-cap companies.
SGX's head of research and retail Chan Kum Kong said the tie up builds on the bourse's "suite of multi-faceted investor education, research and outreach initiatives, such as SGX Academy courses, regular market updates and sector reports, as well as SGX corporate access days".
"With the advent of technology, we see tremendous potential in this innovative platform that is adding another dimension to fundamental investment research," he said.
Jefferies Singapore equity analyst Krishna Guha told The Business Times that the investment "may yield an attractive return for SGX, as it invests in new models to serve investors and companies".
Terence Wong, chief executive at fund management firm Azure Capital noting that liquidity in the Singapore market has thinned in recent years, described the move as a positive one.
He said: "It is an interesting strategy by SGX. As existing research houses continue to downsize, there are opportunities for analysts who have been out of a job to freelance."
He added that under the Markets in Financial Instruments Directive (MiFID) II, in play since January 2018, many European banks have cut back on their research teams, and that the spillover effects have been seen in their US and Asian research outfits.
Just last week, BNP Paribas struck a deal with independent research provider Morningstar, under which the French bank's Asia-Pacific research work is to be outsourced. An analyst who declined to be named said this could be the "new norm" for banks.
Since 2017, SGX has administered the StockFacts Research Programme, under which listed companies are profiled by independent research firms. The information is then distributed to potential investors through the distribution channels of these research firms and, subsequently, through SGX's channels.
At the start of the year, the bourse partnered the Monetary Authority of Singapore (MAS) on the Grant for Equity Market Singapore (GEMS) to strengthen research coverage of Singapore enterprises.
