Posted on January 14, 2010 - by musicwhiz

The Hype over Dual Listings

Photo by sophiea

Fresh into the new year, and after taking a good rest from the festivities, it suddenly struck me that I had some issues to comment on and wax lyrical over. Dual listings is one of them, and I got pretty much incensed over the recent hype over dual listing proposals made by several SGX-Listed companies (incidentally, I can recall about 6 and they all happen to be S-Chips or SGX-Listed China Shares).

The fact that everyone is getting excited over the dual listings had me thinking – was there a material change in the business which should elicit such a response? Or were people merely getting excited over a story (as usual) and following the herd instinct? The first to list on a separate bourse was China XLX, and when the shares started trading on HKSE, the share price over in Singapore jumped nearly 100% to 90+ cents before settling to a more “reasonable” level of about 65 cents, but still higher than the pre-dual listing news of about 40-50 cents. Apparently, the argument presented was that such companies which could list on two bourses should therefore command higher valuations, and so the Singapore share price should re-rate to follow those on HKSE.

The following is a laundry list of the China companies and their dual listing plans and status:-

One can observe that there are 5 companies in the list and they are either planning a listing in Taiwan or Hong Kong. One must then ask the rationale for the proposed listing, and whether it advances the company’s plans for expansion, or merely serves as a platform for its shares to be tradeable on both exchanges? Apparently, the issue of valuations had come up and was discussed in some articles around the time the news was made known of such dual listings. It is widely recognized and known (though never publicly acknowledged) that China companies in Singapore (“S-Shares”) trade at lower valuations than their counterparts in Hong Kong, Taiwan and even China. Arguably, of course, the size and scale of the company’s operations play a part in determining their valuation; but this can be conveniently forgotten as analysts scramble over themselves to compare companies in the same industry which are listed on different bourses. Read more…

Related posts:

1. Time Watch – Dual List Hype
2. China Animal Healthcare – joins the band wagon and announces its intention for a dual listing in Hong Kong…..
3. Divestment of China Fishery – Reasons and Rationale