Chinese companies are turning to Singapore for their initial public offerings as the trade war between the United States and China escalates.

At least five major companies from mainland China and Hong Kong have expressed their intention to launch their shares on the Singapore Exchange (SGX) in the next 12 to 18 months.

These companies include a Chinese energy company, a healthcare group, and a Shanghai-based biotech firm. Companies are also considering going public or dual listing.

Sources indicate that this move is part of a broader effort by Chinese companies to establish their presence in Southeast Asia, as they seek alternative markets amid the ongoing trade war between China and the United States.

The United States and China have long engaged in a tit-for-tat tariff war. Near the peak of the trade war, the U.S. imposed tariffs of up to 145% on certain Chinese goods, while China imposed tariffs of up to 125% on U.S. imports. Despite a recent agreement for a temporary truce lasting 90 days, questions remain about the future of their trade relationship.

Analysts say this uncertainty is driving Chinese companies to seek new gateways to global markets, with Singapore at the top of the list.

The Singapore Exchange attracts major Chinese companies for listing.

The Singapore Exchange has struggled to compete with Hong Kong for dominance in the best and most profitable initial public offerings. So far this year, the Singapore Exchange has seen only four listings.

In contrast, 71 new listings have been issued in Hong Kong since the beginning of 2024 (which still retains its title as the largest market in Asia for initial public offerings).

Jason Su, head of investment banking at CGS-CIMB Securities, stated that Chinese interest could change the status quo. He explained that after the U.S. raised tariffs on China, inquiries about Singapore Exchange (SGX) listings surged significantly.

Paul de Win, senior managing director at the Singapore Exchange, echoed this view, adding that Singapore's role as a regional hub has become increasingly valuable for companies seeking stable and neutral markets outside the United States and Hong Kong.

Singapore enhances its market to attract global companies.

Singapore is taking steps to better develop its stock market to attract more foreign companies. Earlier this year, the government announced a 20% tax discount on initial listings, aimed at reducing costs and increasing the appeal of the Singapore Exchange.

Additional measures are likely to be implemented to encourage listings and trading volume later this year. These efforts are part of Singapore's broader push to establish itself as a leading financial hub in Southeast Asia.

Ringo Choi, head of initial public offerings in the Asia-Pacific region at Ernst & Young, said that Singapore's political stability, which may be an attractive factor for companies wary of geopolitical risks, will be an additional advantage.

However, challenges remain. Stricter listing requirements in Singapore and a conservative investor base may hinder its ability to narrow the gap with Hong Kong.

An anonymous executive in the technology sector in Singapore stated that the country needs to streamline the listing process, especially for technology startups. He added that most regional startups are also based in Singapore, making it a logical choice for an initial public offering. However, the executive emphasized the need to ease current restrictions to achieve this.

China has long sought to strengthen economic ties with the region, especially amid its disputes with Washington on multiple fronts. Chinese companies view Southeast Asia as a rapidly growing market, with a growing middle class and increasing appetite for consumer goods.

Listing in Singapore allows Chinese companies to raise funds locally and enhance their brand. This dual incentive is what makes Singapore extremely attractive.

Hong Kong remains the preferred destination for foreign investments among Chinese companies, but gradual reforms and offerings from Singapore are making it increasingly appealing to major players.

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