Singapore stock exchange: open for business

WITH competition from Hong Kong and Sydney, the Singapore Exchange (SGX) is boosting its exposure to the junior mining and petroleum sectors. RESOURCESTOCKS editor Blake Wilshaw spoke to SGX head of listings Lawrence Wong about the move.

Blake Wilshaw: What are the listing rules for early-stage resource companies on the Singapore Exchange?

Lawrence Wong: In February 2011, we introduced new rules for early-stage mineral, oil and gas companies (MOG), namely junior explorers, to list on the Catalist board.

For the Catalist board, MOG companies need not have revenue or profit but they must have established the presence of at least “indicated resources” of minerals or “contingent resources” of oil and gas, according to specified international standards and practices. At the point of listing, MOG companies will need to demonstrate that they have sufficient working capital for at least 18 months after listing.

Listing aspirants would need to appoint a sponsor to assist with their listing application and also continuing listing obligations. The other normal listing requirements and disclosure still apply.

The rules relate mainly to increased transparency on the developments in MOG companies and verification by independent qualified experts, including the following:

• The listing applicant must have established the existence of “indicated resources” of minerals or “contingent resources” of oil and gas, as certified by an independent qualified person in accordance with specified international standards and practices;
  
• A legal opinion must be obtained on the listing group’s compliance with the relevant laws and regulations and of its title and rights to assets;
  
• A listing applicant must disclose its plans and milestones for the first 18 months post-listing in its offer document; and
  
• A listing applicant must demonstrate that it has sufficient working capital for at least 18 months post-listing (compared to only 12 months post-listing for other Catalist companies).

BW: What about established companies?

LW: For mining companies in production, they are more suitable for the SGX Mainboard in terms of the listing requirements and expectations. SGX is home to more than 26 listed companies in the commodities and resource sector, with a combined market capitalisation of more than $US50 billion. Among them are well-known names such as Sakari Resources (previously known as Straits Asia Resources), Wilmar, Noble and Olam.

BW: Why would a company benefit from a Singapore listing?

LW: Supported by a stringent but market-oriented regulatory regime, Singapore has earned international repute in many areas. As an international financial centre and trading hub, Singapore is the proxy for companies and investors coming into Asia.

Singapore is recognised as the world’s third-largest oil trading centre, the largest for bunker trading and the fourth-biggest for foreign exchange. Singapore is also one of the world’s leading commodity hubs, with more than $700 billion in trade flows in 2010. Coupled with being Asia’s maritime centre, Singapore offers a conducive environment for mineral, oil and gas services companies.

As an international exchange and listing hub, SGX has won the confidence of many global companies with foreign origins. With more than 40% of its listed companies from overseas, SGX provides the platform for companies to raise capital efficiently and establish a stronger footprint in Asia.

SGX’s position as an international fundraising platform is anchored by Singapore as an established fund management hub with ample liquidity and the base to an extensive list of institutional funds and private wealth. Singapore has total assets of more than $1.5 trillion under management to provide ready funding support for the growth of international companies seeking to raise capital in Singapore.

BW: You face some pretty strong competitors in the region, namely the Australian Securities Exchange and the Hong Kong Stock Exchange. What does Singapore offer over these exchanges?

LW: With its ideal location in Asia, Singapore offers an efficient financial and physical infrastructure and proximity to major commodity producing and consuming countries in the continent. Singapore is positioned as the Asian gateway and we offer companies and investors pan-Asian exposure and opportunities.

Each exchange offers varying attributes that satisfy the needs of different companies.

This article originally appeared in the January/February edition of RESOURCESTOCKS.