Source of article: THE BUSINESS TIMES

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The Singapore Business Times recently analyzed the poor post-IPO performance of companies listed on Catalist, Singapore Exchange’s junior board. Many Catalist companies have seen their share prices tumble on debut trading, with further declines thereafter. This has prompted debates about the underlying reasons, with some commentators attributing the issue to “market problems” such as low valuations and poor liquidity, while others argue the problem is structural.

One proposed solution is for the Singapore Exchange (SGX) to adopt a more stringent approach in approving Catalist aspirants. By focusing on companies with strong growth potential, the Exchange could elevate the quality of listings on the second board. This would ensure that Catalist serves as a platform for high-caliber companies, capable of creating value and inspiring investor confidence, rather than a repository for underperforming firms.

It may also be timely to review the listing criteria for Catalist. Allowing only companies with robust growth prospects, or those in high or deep technology sectors with significant potential, to be listed could reshape the perception of Catalist. Such a strategy would position the board as a springboard for companies aiming to scale new heights, rather than a fallback for ventures with limited prospects.

Adopting a quality-over-quantity approach could enhance Catalist’s reputation and attract higher investor participation. By setting higher standards, SGX could erase the impression that Catalist is a market for companies that flounder post-listing and ultimately fade into obscurity. This, in turn, would bolster the junior board’s role as a meaningful contributor to Singapore’s capital markets ecosystem.

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