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Writer's pictureRoger Pay

Dual Listing

Dual Listing


Dual listing a company's shares on stock exchanges in Singapore and Hong Kong is a

popular strategy for companies in Southeast Asia. Here's a breakdown of this process:


What is Dual Listing?


Dual listing refers to a company listing its shares on two or more stock exchanges. In this case, the company would be listed on the Singapore Stock Exchange (SGX) and the Hong Kong Stock Exchange (HKEX).


Benefits of Dual Listing in Singapore and Hong Kong


There are several advantages to a company choosing a dual listing in Singapore and Hong Kong:


  • Increased Liquidity: By listing on two exchanges, the company gains access to a wider pool of investors, which can increase the trading volume of its shares and improve liquidity.

  • Access to Capital: A wider investor base can also make it easier for the company to raise additional capital through secondary offerings.

  • Enhanced Reputation: A dual listing can boost the company's profile and credibility in the region and internationally.

  • Extended Trading Hours: Since the SGX and HKEX have different trading hours, a dual listing can effectively extend the trading window for the company's shares.


Examples of Dual Listed Companies


Several companies are currently dual listed on the SGX and HKEX. Here are a few examples:


  • NIO Inc. (SGX: NIO, HKEX: 9866): A Chinese electric vehicle manufacturer.

  • China Everbright Water Limited (SGX: U9E, HKEX: 1857): A water treatment company.

  • LHN Limited (SGX: 41O, HKEX: 1730): A property development company.


Requirements for Dual Listing


The specific requirements for dual listing will vary depending on the exchanges involved. However, companies will generally need to comply with the listing rules of both exchanges. This may include meeting financial reporting standards, corporate governance requirements, and having a minimum market capitalization.


Considerations for Dual Listing


While there are many benefits to dual listing, there are also some considerations that companies need to take into account. These include:


  • Increased Costs:  There are additional costs associated with maintaining a listing on two exchanges, such as listing fees, compliance costs, and investor relations expenses.

  • Complexity: Managing a dual listing can be more complex than managing a listing on a single exchange. Companies will need to ensure that they comply with the regulations of both exchanges and that they communicate effectively with investors in both markets.


What is secondary listing vs dual listing Hong Kong?


Here's the difference between a secondary listing and a dual listing in Hong Kong:


Secondary Listing


  • A company lists its existing shares on a new exchange (like the Hong Kong Stock Exchange) but keeps its primary listing elsewhere.

  • The original exchange remains responsible for listing regulations and other compliance matters.

  • Often involves instruments like Depositary Receipts (DRs) which represent a bundle of shares from the original listing.

  • Easier and faster to set up compared to a dual listing.

  • Less stringent compliance requirements on the secondary exchange (HKEX).

  • Shares on the secondary exchange (e.g., Hong Kong) might trade closely linked to the price on the primary exchange, but this isn't guaranteed.


Dual Listing


  • A company gets listed on two exchanges (like the Singapore Stock Exchange and the Hong Kong Stock Exchange) with both listings considered primary.

  • The company needs to comply with the full listing regulations of both exchanges.

  • This process is similar to an initial public offering (IPO) on the new exchange.

  • More complex and time-consuming to set up compared to a secondary listing.

  • More stringent compliance requirements on both exchanges.

  • Shares on both exchanges can trade independently and might have price differences.


Here's an analogy:


  • Think of a secondary listing as renting an apartment in a new city while keeping your original home (primary listing).

  • A dual listing is like buying a new house (full ownership) in another city while keeping your original home.


Examples:


  • Alibaba (BABA) is a secondary listing in Hong Kong. Its primary listing is in New York (NYSE).

  • A company like NIO could consider a dual listing in Singapore and Hong Kong if it already has a primary listing in China.


Does SGX allow dual listing?


The Singapore Exchange (SGX) doesn't use the term "dual listing" in the strictest sense. Instead, they refer to it as a secondary listing.


Here's the key point:


  • When a company lists on SGX, it's considered a secondary listing even if it's already listed on another exchange (like the Hong Kong Stock Exchange).


The reason for this terminology is that the company's primary listing, with its main regulatory requirements, remains on the original exchange. SGX acts as a secondary platform for trading the company's shares.


However, this secondary listing on SGX still offers many of the benefits of a dual listing, such as increased liquidity and access to capital.


What is the difference between cross listing and dual listing?


The terms "cross listing" and "dual listing" are often used interchangeably, but there is a subtle difference between the two. Here's a breakdown:


Cross Listing:


  • A company lists its same shares on one or more foreign stock exchanges in addition to its primary exchange.

  • The company remains a single entity with one set of shares.

  • Compliance with listing requirements happens on the primary exchange only.


Dual Listing:


  • A company creates separate listings on two or more stock exchanges, with each exchange considering it a primary listing.

  • This can involve two distinct companies functioning as one economic entity (less common).

  • The company needs to comply with the full listing regulations of both exchanges.


Here's an analogy:


  • Cross listing:  Imagine opening a new branch of your existing store in another country. You're still the same company, just selling your products in a new location with potentially different regulations.

  • Dual listing:  Imagine setting up two completely independent stores, each following the regulations of their respective locations. They might be owned by the same parent company, but they operate somewhat autonomously.


In essence:


  • Cross listing is the more common term and refers to a company expanding its reach to new investor pools by listing existing shares on additional exchanges.

  • Dual listing is a less frequent scenario with stricter requirements,  where the company is essentially treated as a primary listing on both exchanges.


Examples:


  • Cross Listing: Unilever, a UK company, is listed on the London Stock Exchange (ULVR) and also cross-listed in Amsterdam (UNA).

  • Dual Listing: (Less Common) Vale, a Brazilian mining giant, has dual listings in Sao Paulo (VALE) and New York (VALE). Technically, these could be two separate companies under the same economic umbrella.


What are dual listing rules?


While there isn't a single set of universal "dual listing rules," here's a breakdown of the key points to consider for dual listing between Singapore (SGX), Hong Kong (HKEX), and Malaysia (Bursa Malaysia):


General Requirements


  • Each exchange has its own listing rules, so companies will need to comply with both SGX and HKEX requirements. Malaysia doesn't use the term "dual listing" but allows "secondary listings."


Compliance:


  • Financial Reporting: Companies will need to meet the financial reporting standards of both Singapore and Hong Kong. These might involve differences in reporting formats or audit requirements.

  • Corporate Governance: Both exchanges have corporate governance requirements regarding board composition, shareholder rights, and transparency. Companies need to ensure compliance with both sets of rules.

  • Market Capitalization:  Minimum market capitalization requirements exist for listing on both SGX and HKEX. Companies need to meet the thresholds set by each exchange.


Application Process:


  • Separate applications are typically required for each exchange. This means following the application procedures, timelines, and fee structures set by SGX and HKEX.


Additional Considerations:


  • Costs: Dual listing involves additional expenses compared to a single listing. These include listing fees, ongoing compliance costs on both exchanges, and potential investor relation expenses in each market.

  • Complexity: Managing a dual listing can be complex due to potentially different regulations and reporting requirements in each jurisdiction.

  • Tax Implications: Companies should consult with tax professionals to understand potential tax implications arising from dual listings in Singapore and Hong Kong.


Resources:



For Malaysia:


  • Bursa Malaysia doesn't use "dual listing" terminology. Instead, companies from Singapore or Hong Kong can explore a "secondary listing" on Bursa Malaysia. The requirements and process might differ, so it's recommended to consult with Bursa Malaysia directly: https://www.bursamalaysia.com/


Remember, this is a general overview. Consulting with legal and financial professionals specializing in these markets is crucial before embarking on a dual listing journey.



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