Today we will talk about the Singapore Exchange (Singapore Exchange, SGX): its history, role in the global economy, and the most interesting investment stocks. The official currency of the exchange is the Singapore dollar (SGD). At the time of composing the review, 1 SGD equals 0.763 USD. In this review, the dollar sign ($) always stands for the US dollar.
Role in the global economy
SGX is not considered one of the world’s major stock exchanges and is more often referred to as a typical second-tier exchange. As of today, SGX has about 800 listed companies with a combined market capitalisation of $700 billion, which is relatively low by Western standards. In terms of market cap, it falls well behind Euronext Amsterdam, but is ahead of Euronext Brussels. In terms of the number of listed companies, however, the exchange is far ahead of all Euronext exchanges, other than the largest one, Euronext Paris, combined.
SGX is an extremely multinational exchange: more than a third of the listed companies are based abroad, the largest being a British–Dutch oil and gas company Royal Dutch Shell. The top ten companies also include Russia’s Gazprom company, as well as many local enterprises such as mobile network operator Singapore Telecommunications and consumer electronics giant Creative Technology.
Multinational crowd at the Singapore Stock Exchange building
SGX was formed in 1999 but the history of Singapore’s stock market is obviously much longer, dating back to 1930 when the Singapore Stockbrokers’ Association was set up in British Malaya.
In 1964, the Stock Exchange of Malaysia was established. With the secession of Singapore from Malaysia in 1965, the exchange became known as the Stock Exchange of Malaysia and Singapore.
In 1973, currency interchangeability between Malaysia and Singapore ceased, and the Stock Exchange of Malaysia and Singapore was divided, forming the Stock Exchange of Singapore (SES) as an independent organisation.
The modern Singapore Exchange (SGX) was created in December 1999 through the merger of the Stock Exchange of Singapore with the Singapore International Monetary Exchange (SIMEX) and the Securities Clearing and Computer Services Pte Ltd (SCCS).
Top-performing stocks on SGX
The full list of companies traded on SGX can be found with the MSN Stock Screener. Let’s make a brief review of this year’s top-performing stocks.
The leading company in terms of market capitalization by a significant margin is the above-mentioned Royal Dutch Shell (ticker symbol: PU7D, market cap: $216B), while among local companies the leader is a banking and financial services corporation DBS Group Holdings (ticker symbol: D05, market cap: $55B).
The leaders in terms of stock price performance over the past 6 months are investment holding company Infinio Group (ticker symbol: 5G4, market cap: $18M*, 6-month share price growth: 540%) and audiovisual equipment manufacturer Creative Technology (ticker symbol: C76, market cap: $317M, 6-month share price growth: 428%).
In terms of annual profits growth, the leaders are food companies Khong Guan (ticker symbol: K03, market cap: $41M, profits growth: 2120%, P/E ratio: 27) and Fraser & Neave (ticker symbol: F99, market cap: $2.4B, profits growth: 1090%, P/E ratio 2.4), as well as real estate investment trust Fortune REIT (ticker symbol: F25U, market cap: $14B, profits growth: 892%, P/E ratio: 5.6).
Note that although there are other companies with higher growth rates than the ones mentioned here, we have excluded them from the review due to their high P/E ratios, which may indicate a too high investments risk.
On SGX, you will not find any particularly expensive stocks, the most expensive one being DBS Group Holdings, currently traded at $81.27 a share. The stock, however, isn’t very liquid: an average of about 780 shares are sold per day, for the amount of $63,000. And the leader in terms of daily trading volume is railway parts maker Midas Holdings (ticker symbol: 5EN, market cap: $278 million). On average, about 69 million shares of the stock are sold daily at a price of $0.14, their total value exceeding $9 million.
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The letters in the text stand for large numbers. 'B' stands for billions, and 'M' stands for millions. The $ sign stands for US dollars (not to be confused with Singapore dollars).