Hot stocks: Singapore's 3 finance firms surge as MAS relaxes funding rules and allows M&As

THE share prices of Singapore's three finance companies soared on Tuesday after the Monetary Authority of Singapore (MAS) said it would allow foreign takeovers of finance companies, and relaxes rules to boost funding to small and medium-sized enterprises (SMEs).

At 03:09pm, Singapura Finance was trading around S$1.00 a share, up 13.50 Singapore cents, or 15.61 per cent. Hong Leong Finance was trading around S$2.49 a share, up 21 Singapore cents, or 9.21 per cent. Sing Investments & Finance was hovering around S$1.39 a share, up 11.50 Singapore cents, or 9.02 per cent.

Earlier on Tuesday, MAS said it would liberalise its policy of not allowing a foreign takeover of a finance company. This is to give finance companies greater flexibility to explore strategic partnerships and innovative business models that can strengthen their SME financing business.

MAS said it was prepared to consider an application for a merger or acquisition if the prospective merger partner or acquirer commits to maintaining SME financing as a core business of the finance company.

Starting this year, the regulator will also be relaxing some of its rules to strengthen the resilience of finance companies, so that they can provide more funding to SMEs.

Hong Leong Finance, Sing Investments & Finance and Singapura Finance accounted for just under S$7 billion of outstanding SME loans in the second quarter of 2016. This is less than 9 percent of total loans.