SINGAPORE Exchange (SGX) is seeing an increased demand for capital raising by businesses expanding into South-east Asia, chief executive officer Loh Boon Chye said at the CGS China-Asean Business Leaders Summit on Thursday (Mar 9).

Loh, who is travelling, delivered his keynote speech via a pre-recorded video. He said Singapore was a favoured destination for firms looking to enter South-east Asia, a region poised to become the world’s fourth-largest economy by 2030. “This trend has become more pronounced with the implementation of RCEP (Regional Comprehensive Economic Partnership), the world’s largest free trade agreement, in 2022,” he said.

RCEP covers around 30 per cent of the world’s gross domestic product and population. It brings Australia, China, Japan, South Korea and New Zealand into the same agreement with the 10-member Asean group.

Loh said: “Our international platform and connectivity play a key role in the growth and capital structure needs of fast-growing Chinese and South-east Asian companies. Across the region, we are seeing increased inquiries and interest from companies for not just a primary listing, but also a secondary listing, as they expand beyond their home grounds.”

Companies such as Chinese electric vehicle maker NIO, and Emperador, a leading global spirits company from the Philippines have benefitted from SGX’s secondary listings framework to broaden their access to capital and reach in this region.

Loh shared that about 40 per cent of SGX listed companies by market capitalisation are foreign companies. They are attracted by the access to international capital in a pro-business and well-regulated environment, as well as the enhanced visibility and international profile from a public listing in Singapore.

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Among the international companies listed on SGX, 35 per cent come from Greater China, and another 30 per cent from South-east Asia. These companies are from diverse sectors, which include property, healthcare, technology, and manufacturing. Beyond a company listing, SGX is also seeing a trend in companies issuing bonds – including green bonds – on its platform, as they grow their business and align their objectives with sustainability goals.

Loh said: “Today, 15 per cent of bond issuers on SGX come from Greater China. With the further opening up of China’s bond markets to global investors — the second largest bond market in the world — there will no doubt be more room for collaboration between SGX and China.”

In 2020, SGX signed a wide-ranging agreement with China Central Depository & Clearing Co, (CCDC) to strengthen and promote Singapore and China’s bond markets. This is CCDC’s first comprehensive MOU of strategic cooperation with an international exchange, that covers the full life cycle from issuance to settlement and custody.

Since then, SGX has welcomed the listing of onshore renminbi bonds as well as the listing of “Pearl Bonds” or Shanghai free trade zone bonds by Chinese issuers. These Pearl Bonds are cleared via CCDC and can be subscribed by investors in the Free Trade Zone and by offshore investors.

With investors and companies increasingly paying attention to sustainability, SGX is also seeing strong demand for green, social, sustainability and sustainability-linked (GSSS) bonds.

Loh said: “Today, more than 50 per cent of listed Asia-Pacific G3-currency GSSS-bonds are listed on SGX, making us the leading venue for such bond listings. At the same time, there continues to be a growing demand from investors to access opportunities in China’s onshore bond markets. This led to the listing of the world’s largest Chinese pure government bond ETF issued by CSOP Asset Management on SGX.”

Loh believes there are many more opportunities for SGX to play an active role in the internationalisation of China’s bond markets, especially as China increases its pace in green finance. He also sees huge potential for exchanges in the region to collaborate and enhance financial linkages, “something that we have been actively working on”.

An example is the depository receipts (DR) linkage between SGX and the Stock Exchange of Thailand, the first exchange-level DR cooperation in Asean, which is expected to go live this year.

The exchange-traded fund (ETF) Link between Shenzhen Stock Exchange and SGX went live in December last year, paving the way for investors in China and Singapore to access ETFs in each other’s markets.

Loh said SGX hopes to grow the link to include more ETFs across different investment themes such as environmental social and governance and regional equities to cater to global investors.