S68.SI - Singapore Stock Exchange

[cameronfen]

I was catching up on VIC reading and I came across a pitch on the Mexican stock exchange: https://www.valueinvestorsclub.com/idea/Bolsa_Mexicana_de_Valores/6915673504 . It was a good pitch and that company is probably a good bet too. 

 

A big theme for me is looking at companies that are clones of good businesses in the US, across the world, just hitting their growth phase.  Anyway stock exchanges seem like excellent companies and those located in developing areas probably have a lot of growth in the future. 

 

Just from brainstorming it seems like the Singapore stock exchange is one of the best positioned.  They already have a critical mass of public companies and can take advantage of countries that are rapidly developing like Indonesia, Malaysia, Vietnam, Philippines and Thailand and they should hopefully benefit from a growing financial system in all those areas. 

 

I think the downside is Singapore isn’t integrated into a large country and many public companies in those countries will think about their local exchanges first. 

 

Metrics suggests this thesis makes sense, ROE is 40+% and the company pays 75% of earnings (or FCF I forget) as a dividend.  Based on the growth prospects, this suggests to me that growth requires little capital.  They recently had a large increase in earnings this year and I’m not exactly sure if it’s secular growth or something fleeting (maybe COVID related idk why).  PE is around 22 but if this thing has IRR 10-15% a year for 10-20 years (growth plus div basically), who cares what multiple you are paying now.

 

Just posting this to stress test the thesis and curious if anyone had other thoughts. 

[elliott]

I have looked at some companies there. The better known are the banks, reits, singtel, starhub...

But I dont think any of those ring a bell for international investors. Other exchanges around the world do have names that you and I, whereever we are, may want to invest in.

So, as you mentioned, I think Singapore stock exchange currently lacks names to attract international investors, and as a "marketplace" network effects apply. Meaning, it will not be easy to change things.

That does not mean the company cannot overcome the situation, however, or that it cannot grow and be a good investment regardless.

Some argue that Hong Kong is losing its financial centre status and that Singapore is taking its place.

[Scunny Bunny]

FWIW In 2011 SSX bid to buy Australia's ASX for A$8billion was knocked back by the Australian Government on "national interest" grounds which were explicitly the clearing & settlement system which ASX owns. The Government then were Labor & most of us realised this was code for "we don't like Singapore's politics". ASX is now valued at A$14bn versus SSX at A$9.7bn equivalent. ASX has had so many screw ups in last 12 months - a website revamp that went badly wrong and an options trading system "upgrade" that cost investors zillions plus they have delayed a blockchain based settlements upgrade.  ASX would be very vulnerable now and the Government is about as right wing/laissez faire as Australians can stomach - with little chance of being turned over. ASX is the best opportunity in the region given nationalistic stances of other Governments. But it would be a big bite.

[Ronchong]

Elliot hits the nail on the head. The SSX has been trying to attract listing for a while now but as far as I know, it hasn't worked. IMO, SSX really screwed up when they, in a desperate attempt to boost liquidity, over-loosened the regulation and attracted a bunch of fradulent chinese companies to list here. The Chinese companies were hot back then, attracting a lot of retail demand but blew up when GFC hits. (If I'm rmbed correctly, about 30 plus companies had irregularities when the stock market only had about 300 plus listed companies) With investor's confidence in the SGX market destroyed, liquidity in the market fell to a low and companies lost the only reason to list here - the access to capital.

Once in a while, there are still a few foreign companies that list here but you really got to be careful of them. Back to the story, SGX then tried to increase its revenue source by expanding into the Forex market, opening up derivatives, and acquiring other markets (like what Scunny Bunny alluded) but AFAIK, none of these has been wildly successful. You kind of get a hint of how bad the market is when you look at the STI index. I have never seen a market index when 20% of the constituents are made up of REITS!

[cameronfen]

Thanks!  All this is really helpful. 

 

I may look into ASX but I’d rather something with developing market exposure.  The only other countries Fido will allow me to look at that fit these criteria are South Africa and Mexico.  I’m looking at both and just so I don’t spam the board with names appreciate any feedback on those names as well.  I think currency risk is a big thing for both countries.

[MattR]

I found the Warsaw Stock Exchange, Giełda Papierów Wartościowych w Warszawie, seems to be a great deal at the moment.

[cameronfen]

I found the Warsaw Stock Exchange, Giełda Papierów Wartościowych w Warszawie, seems to be a great deal at the moment.

 

Yea Fido doesn’t have the polish market otherwise I would have looked at it.  Allegro too and a few other names.  What broker are you using IBKR? 

[MattR]

I found the Warsaw Stock Exchange, Giełda Papierów Wartościowych w Warszawie, seems to be a great deal at the moment.

 

Yea Fido doesn’t have the polish market otherwise I would have looked at it.  Allegro too and a few other names.  What broker are you using IBKR?

Well I am European, so mostly DeGiro and IBKR for my shorts.

 

[elliott]

Some Polish firms may also trade in German or English markets.

I once owned Agroton, and liked IMC, but have not followed any of those names for some time.

Wawel may be interesting.