Photographer: Ore Huiying/Bloomberg
markets

Singapore Exchange Takes on Hong Kong With Dual-Class Shares

Updated on
  • Bourse operator will consult on rules this quarter: SGX CEO
  • Move follows a similar plan announced by Hong Kong exchange

Singapore Exchange Ltd. said it will allow companies with dual-class share structures to list, a month after Hong Kong announced a similar proposal, as competition between markets for technology listings becomes increasingly fierce.

SGX will consult on the rules this quarter and expects the first listing “soon after,” Chief Executive Officer Loh Boon Chye said Friday at the company’s quarterly earnings briefing.

The moves by the two Asian exchanges come as some of the world’s largest technology companies from Alibaba Group Holding Ltd. to Facebook Inc. use stock with enhanced voting power to protect the influence of their founders and management. Such structures have faced opposition from investors, who fear their rights could be eroded amid corporate governance concerns.

China Goes West

Companies with controversial share structures list in U.S. where rules are friendlier

Source: Bloomberg, SEC Filings

Note: Market value as of Jan. 19

SGX shares rose 4.6 percent Monday to close at S$8.35, the biggest gain since July 2009 and their highest level since July 2015, according to data compiled by Bloomberg. Analysts including Nick Lord of Morgan Stanley and RHB Bank Bhd.’s Leng Seng Choon wrote in research reports that the stock would probably gain as revenue increases.

The Monetary Authority of Singapore said Friday it supported SGX’s decision to allow dual-class share structures, and that it would review the safeguards the exchange will propose to mitigate the risks involved.

Read: Why Facebook to Snap Make Investors Feel Second-Class: QuickTake

Hong Kong Exchanges & Clearing Ltd. proposed allowing innovative companies to list with dual-class shares as part of a package of measures released last month. Its plan would see each multiple-vote share represent no more than 10 times the votes of ordinary shares, and only companies with a focus on new technologies would be eligible. Founders and executives would need to demonstrate how their contribution merits the structure.

SGX also said that it would go ahead with the introduction of stock futures on some of India’s largest companies on Feb. 5. The National Stock Exchange of India Ltd. was asking the Singapore bourse to delay the start, Bloomberg reported last week. The exchange operator is also planning a medium term note program to raise as much as S$2 billion ($1.51 billion) in debt to fund its growth.

“The company’s plan to launch the Indian single-stock futures and dual-class share scheme are positives,” Leng of RHB wrote on Monday. RHB recommends investors buy SGX shares and has a target price of S$9.

New products and cuts, including to operating expenses, may not be enough to lift SGX’s profit, Bloomberg Intelligence senior industry analyst Sharnie Wong wrote in a note Monday.

(Updates share price in fourth paragraph.)
    Before it's here, it's on the Bloomberg Terminal. LEARN MORE