11 hours ago
- Business
- Independent Singapore
Investors gain access to Thai and HK giants as SGX expands SDR line-up
Singapore: Investors in Singapore now have even more options to diversify, with the Singapore Exchange (SGX) and Phillip Securities rolling out six new Singapore Depository Receipts (SDRs). These latest additions include well-known companies listed in Hong Kong and Thailand, bringing the total number of SDRs available on SGX to 21.
The new SDRs include three leading firms from Hong Kong: Semiconductor Manufacturing International Corp (SMIC), and PetroChina. They also feature three Thai companies: Bangkok Dusit Medical Services, CP Foods, and Gulf Development. Together, SGX's SDRs now account for about 50% of the weight of the SET50 and Hang Seng Index.
SDRs represent beneficial interests in securities listed on foreign exchanges. They are issued without formal backing from the underlying company. SGX first introduced Thai SDRs in May 2023.
The latest offerings spotlight CP Foods, which is the second-best performer in the SET50 index this year, and Bangkok Dusit, the largest private hospital operator in Thailand. After merging with InTouch, Gulf Development is once again available as an SDR, and it now ranks as Thailand's fourth-largest company.
In October 2024, SGX introduced Hong Kong SDRs. These reflect five large-cap companies and lower the minimum investment to under SGD 250, compared to SGD 4,000 needed for direct Hong Kong shares.
According to the local bourse, in excess of 60% of the SDRs are traded by more than 7,000 retail investors. Hong Kong DRs are highly traded and led by Alibaba. Meanwhile, Thai SDRS have seen their trading activity double since their trading began in the second half of 2024.
SGX is seeing a significant rise in cash equities trading in 2025. Analysts at Maybank Research link this growth to structural factors. Maybank has increased its target price for SGX to SGD 16.09 and keeps a 'BUY' rating. So far this year, SGX's average daily cash equities trading value has jumped by 20% compared to 2024, with April reaching SGD 1.9 billion, the highest since May 2009.
Several reasons contribute to this growth. Ongoing policy uncertainty in the United States is seeing investors hedge by channelling investments to stable markets like Singapore. A construction boom and falling domestic interest rates make equities more appealing. See also Singapore stocks traded higher on Thursday — STI rose 0.6%
Maybank also points to the potential effects of the Monetary Authority of Singapore's (MAS) S$5 billion Equity Market Development Programme (EQDP), which aims to improve market liquidity, especially for small and mid-cap stocks. Since Nifty contracts migrated to SGX GIFT City in July 2023, the exchange has seen a 13% rise in average trading volumes.
Despite this positive outlook, SGX must keep supporting small and medium-sized enterprises (SMEs). These businesses represent 99% of all companies in Singapore and provide 70% of jobs. The equity capital market gives these firms a way to raise funds since they often struggle to get traditional bank loans.
As SGX explores removing the watchlist for underperforming companies, it is essential to keep strong regulatory standards to protect investors. While this reform may reduce stigma, it also removes an early warning indicator. Enhancing sponsor oversight and introducing different disclosure methods is important for ensuring investor protection.
Delistings, while often seen negatively, can simply be part of a company's natural cycle. In fact, many recent exits were led by external buyers, signalling continued investor interest. A healthy, mature market should make room for both new listings and graceful exits, giving businesses the space to evolve. See also What is fair? Who determines what is fair?
With strong investor interest, solid governance, and the right support, SGX has the chance to become a more active, attractive market, especially for new or growing businesses. And if trading activity keeps up, it could spark new energy and confidence in the local bourse.
