S'pore braces for delistings to continue even after rule fix. YahooFinance
The Singapore exchange tweaked the voluntary delisting rules earlier this month, shifting the power to minority shareholders. Market watchers have said bidders may have to pay higher premiums to get deals done.
Delistings are expected to continue in the second half of this year even at higher prices, according to a poll of four analysts, because the rule change doesn’t affect the persistently low valuations which continue to plague the Singapore market. The Straits Times Index is trading at one-year forward price-to-book ratio of 1.13 compared with 1.71 for the MSCI Asean Index, according to data compiled by Bloomberg.
Taking listed firms private has been a key theme in Singapore’s equity market over the past few years as major shareholders, institutional investors and industry peers buy up companies due to low multiples. Fourteen companies are undergoing privatization or in the process of being bought out this year, the highest number since 2016, according to a report from DBS Group Holdings Ltd. this month.
“New rules will not entirely derail the trend of delistings in Singapore. In fact delistings may continue at a similar rate,” said Nirgunan Tiruchelvam, head of consumer equity at research firm Tellimer Research. “Premiums can rise but not beyond what’s affordable.” To be sure, while delistings have picked up, equity offerings have also jumped in Singapore with firms raising $1.67 billion in initial share sales this year, more than the entire amount issued for the whole of 2018, according to data compiled by Bloomberg.Unusual Ltd.
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