Singapore to see SOE upsurge with direct listing framework

An increasing number of Chinese companies, especially State-owned ones, are expected to issue stocks in Singapore under a direct listing framework, said a senior manager of the Singapore Exchange in Beijing on Wednesday.

The direct listing framework agreement, signed between the China Securities Regulatory Commission and the Singapore Exchange in November, will provide a more convenient channel in which State-owned companies can seek international capital and enter the global market, said Lawrence Wong, the executive vice-president at Singapore Exchange.

"Some State-owned companies have shown great interest in listing in Singapore, especially those in real estate, mining and medical treatment industries," he said.

Without the framework, Chinese companies have had to incorporate an overseas entity and then apply to list in Singapore, as so-called red chips.

But under the direct listing framework, companies can have their main business in the mainland and directly issue stocks on the Singapore Exchange after obtaining an administrative license from the CSRC.

It also means applicants must comply with all relevant laws and regulations in China, as well as those of Singapore and the exchange.

It usually takes six to eight weeks for the Singapore Exchange to review submissions with CSRC approval.

Then it takes another two to three weeks to file a prospectus with the Monetary Authority of Singapore, get the registration and launch the offer.

"We are at the initial stage of this new process with CSRC and will work with them to synchronize the process as much as possible," Wong said.

Zhao Yang, a partner with Jingtian & Gongcheng Attorneys at Law, said Singapore will join Hong Kong as a main destination for State-owned enterprises to directly list overseas.

"So far, there is no difference between the CSRC approval standards for companies willing to list in Hong Kong and Singapore," said Zhao. "Companies will choose their listing framework and market based on the specific requirements of different exchanges."

Tong Daochi, director-general of the Department of International Affairs of the CSRC, said earlier that the Chinese securities regulator welcomes the establishment of the direct listing framework in Singapore and supports Chinese domestic enterprises that have fulfilled the overseas listings standards to independently choose markets for issuing stocks according to their own needs.

By the end of November, 140 Chinese firms were listed on Singapore Exchange, with a total market value of more than 150 billion yuan ($24.78 billion). The number of public companies in the exchange totaled 779 and had a market value of $751 billion.