More than half of the locally listed second companies have seen their stock prices soar this year | Lianhe Zaobao

Among the companies conducting secondary listings on the Singapore Exchange, more than half have shown strong stock performance this year, with some companies even seeing increases of over 100%. However, analysts interviewed have cautioned that, given the limited liquidity in the local market and the risks of exchange rate fluctuations, investors should remain cautious when investing in these stocks.

Currently, more than 20 companies have chosen to conduct secondary listings on the Singapore Exchange, meaning they first list on their home exchange before listing on the SGX. A recent notable example is China Medical System, a healthcare company that listed in Hong Kong first and then on the SGX in July this year, with its stock price surging 11% on the first day.

Many companies have performed impressively this year, with China Environmental Resources leading the pack, seeing its stock price soar nearly 147%; closely followed by Nio and Comba Telecom, which rose approximately 63% and 54%, respectively.

Prudential, Hongkong Land, and Jardine Matheson also performed well, with stock price increases exceeding 40%.

On the other hand, some secondary listed companies have not performed well. Among them, Helens International Holdings, involved in bar operations and franchising, has faced the most pressure, with its stock price plummeting nearly 62% this year. Additionally, China Kangda and Top Glove have also experienced declines of over 50%.

Beware of Insufficient Liquidity and Exchange Rate Risks

Moomoo's Singapore trading manager, Tu Junxiang, stated in an interview with Lianhe Zaobao that some investors are quite interested in secondary listed companies, mainly because these companies have operations across the region and even globally, possessing significant potential. For example, electric vehicle giant Nio not only operates in the Chinese market but is also expanding into Europe, the Middle East, and Southeast Asia; IHH Healthcare operates medical facilities in Singapore, Malaysia, India, and China.

Tu Junxiang also pointed out that some secondary listed stocks are traded in Singapore dollars, such as IHH Healthcare and Helens International Holdings, which somewhat reduces foreign exchange risk.

However, Dr. Han Wei, a portfolio manager at Phillip Securities, cautioned that these companies have underlying concerns. He noted that due to the low trading volume and liquidity in the Singapore market, investors may face slippage risks during buying and selling, meaning stock prices can fluctuate significantly due to low trading volumes, making it easy for investors to get trapped at high prices Han Wei expects that this situation is unlikely to improve in the short term.

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In addition, Han Wei also mentioned that some companies, including Nio, Prudential Insurance, and Jardine Matheson, still conduct transactions in US dollars, which exposes investors to exchange rate risks. He also reminded that companies typically release their performance first on the primary listing exchange, which may lead to Singapore investors being unable to make timely buy or sell decisions due to time differences and information asymmetry.

Considering the above factors, Han Wei advises investors to maintain a cautious attitude when considering purchasing second-listed stocks, as this can reduce many uncertainties and potential risks.

At the same time, Tu Junxiang also suggests that investors should focus on several factors before buying, including whether the liquidity of the company in the primary listing market is sufficient, as insufficient liquidity may likely restrict the second listing market as well; additionally, attention should be paid to the stability of the trading currency to avoid significant exchange rate fluctuations affecting investment returns.

Insufficient Trading Volume is a Shortcoming in Attracting Second Listings in China

In addition to attracting primary listed companies, the new exchange is also actively promoting more companies to conduct second listings. What are the advantages and disadvantages of Singapore compared to other regional exchanges?

Tu Junxiang believes that Singapore has political and policy stability and transparency, coupled with the good international reputation of the new exchange and the Monetary Authority of Singapore, and the long-term stability of the Singapore dollar exchange rate, all of which help attract more companies to list.

However, he also pointed out that Singapore's biggest disadvantage is insufficient market liquidity, which may cause hesitation among companies intending to list. He said, "Singapore has a small population base, and retail investors have limited capital."

Han Wei holds a more cautious view on this. He believes that the relatively limited trading volume and market liquidity may affect the enthusiasm of companies and investors. In the long run, this may produce a "Matthew Effect," where companies that are originally inactive in trading find it even harder to attract funds and attention, and may tend to concentrate resources on the primary listing exchange