More choices for investors as Singapore and Thailand exchanges boost partnership to with DR Linkage

21, Sep. 2021

Securities and Exchange Commission of Thailand holds seminars on investment strategies like this one involving sustainable development. The commission hopes to forge more partnerships with its Singapore to provide investors with more opportunities (Photo: SEC Thailand)
Securities and Exchange Commission of Thailand holds seminars on investment strategies like this one involving sustainable development. The commission hopes to forge more partnerships with its Singapore to provide investors with more opportunities (Photo: SEC Thailand)

By Celine Chen

SINGAPORE, NNA - To boost cross-border opportunities for investors, Singapore Exchange (SGX) and The Stock Exchange of Thailand (SET) are advancing regional bloc ASEAN’s securities market cooperation by launching the Thailand-Singapore DR Linkage.

It will be the first exchange-level collaboration on depository receipts (DR) in the Southeast Asian grouping, giving investors unparalleled access to the region’s growth markets, said a statement by SGX on September 15.

Under the DR Linkage, depository receipts representing shares in an SGX-listed security will be issued for trading on SET and vice versa.

Investors in Thailand and Singapore will benefit from the ease of buying and selling securities via a DR through their local broker arrangements and in their local currency. Depository receipts will trade according to their respective home market rules.

Developed in response to the increasing demand from market participants in both countries for more investment choices, the connectivity will play to their respective sectoral strengths such as Real Estate Investment Trusts (REITs) in Singapore and fast-growing companies in Thailand.

It leverages on existing market infrastructure and ecosystems to achieve greater connectivity between the two markets – the biggest among the 10 economies that form the Association of Southeast Asian Nations (ASEAN), said SGX.

While the Singapore stock market is one of the top performers in Asia, it is now banking on SPACs (Special Purpose Acquisition Companies) to fire up the waning IPO segment.

Earlier this month, the Singapore exchange became the first Asian bourse to allow SPACs to list on its mainboard and provide investors with more choices.

Meanwhile, SGX and the Thai exchange expect to introduce the first DR in the next 12 months.

Loh Boon Chye, CEO of SGX, said, “We have been partners with the SET for many years and the Thailand-Singapore DR Linkage will enable us to build scale together and set a blueprint for future regional collaboration. It raises ASEAN’s profile and offers investors enhanced access with unmatched efficiency. By harnessing each other’s capabilities, we can bring greater connectivity not only across borders but across multiple asset classes.”

Agreeing, Pakorn Peetathawatchai, President of SET, said, “The Thailand-Singapore DR Linkage not only enables investors to conveniently diversify their portfolio at home country, but also improves price efficiency by linking the liquidity of the two premier ASEAN markets."

He said the move is in line with SET’s key strategy to venture into new frontiers such as adding products with international exposure to widen business opportunities while offering new investment alternatives to investors.

In a separate press statement, the Monetary Authority of Singapore (MAS) and the Securities and Exchange Commission of Thailand (SEC Thailand) said both countries will continue working together to further enhance mutual connectivity and widen investment selections for investors.

Ruenvadee Suwanmongkol, secretary-general of SEC Thailand, said the commission had made considerable efforts to revise rules and regulations related to DR issuance in Thailand in order to increase investment options for investors.

She said, "SEC Thailand looks forward to the successive implementation and participation from market stakeholders. Meanwhile, we will continue to explore further collaborations with MAS in order to advance our capital markets development in the future."

In Singapore, the launch of a framework for SPAC listing on SGX from September 3 has drawn excitement from investors following huge interest in listings and acquisitions by blank-cheque or shell companies in America since last year.

After raising money through an initial public offering (IPO), a SPAC would buy a company, usually a unicorn startup which also enables the latter to go public much faster than the traditional IPO route.

Market observers said regional startups choosing the SPAC route might benefit from a dual or secondary listing, first in the US and then in Singapore.

Southeast Asia's ride-hailing and delivery giant Grab Holdings is reportedly considering a secondary listing in its home market of Singapore after its recent Nasdaq listing via a SPAC merger with Altimeter Growth Corp in a $40 billion deal, the biggest ever SPAC acquisition so far, according to Reuters.

In its market update on September 13, SGX said global concerns of de-accelerating economic growth have mounted since the end of June, with global stocks gaining 2 percent over the past 10 weeks, whilst Asia Pacific stocks, including the Singapore index STI, have generated 0.2 percent gains.

Since June, mining, utilities, technology, healthcare products and basic materials have been stronger players, while lodging, food services, leisure, airlines and transport were among the lesser-performing segments.

SGX also noted that multiple Singapore stocks have propelled into the most 150 traded stocks this year on the back of a surge in trading turnover.

Singapore’s 150 most traded stocks in 2021 YTD (Year To Date) contributed more than 95 percent of the day-to-day turnover of all stocks listed on SGX.

Among the 150, 22 stocks have seen a more than 10-fold increase in daily turnover in the 2021 YTD from 2020. They include 11 stocks listed on the mainboard, and another 11 on the catalist listing.

Of the 22 stocks, six were industrial, four from the consumer cyclical market, while the energy, basic materials and real estate (excluding REITs) sectors were each represented by three stocks.