Singapore – Escalating tensions in the trade war between the United States and China are prompting a notable shift in listing strategies for Chinese enterprises. Sources exclusively reveal that at least five mainland Chinese and Hong Kong-based companies are actively exploring initial public offerings (IPOs), dual listings, or share placements on the Singapore Exchange (SGX) within the next 12 to 18 months.

While the sources declined to disclose the specific identities of the companies due to the sensitivity of the matter, they indicated that the potential listings involve a Chinese energy firm, a Chinese healthcare conglomerate, and a Shanghai-headquartered biotechnology company. It is understood that these plans are currently in preliminary stages and subject to final approvals and market conditions.

This burgeoning interest from Chinese firms represents a potentially significant boost for the SGX, which has been striving to attract larger listings and bolster trading volumes despite its established reputation as a hub for high-yield instruments like Real Estate Investment Trusts (REITs). According to the SGX's official website, the exchange saw a modest four new listings in 2024, a stark contrast to the 71 new listings recorded by the Hong Kong Stock Exchange (HKEX) during the same period.

Jason So, Head of Investment Banking Group at CGS International Securities, commented on the trend, stating, "Amidst the trade friction with the U.S., Chinese companies are increasingly looking at Southeast Asia for market access or expansion, and the Singapore Exchange naturally becomes a point of interest."

The trade war has seen the U.S., under President Donald Trump's administration, impose tariffs of up to 145% on Chinese imports, with China retaliating with duties as high as 125% on American goods. While a 90-day truce was agreed upon last weekend, the inherent uncertainty surrounding its duration and the unpredictable nature of the Trump administration continues to fuel concerns among Chinese businesses.

So further noted a "surge in inquiries" regarding SGX listings from Chinese companies following the intensification of trade measures by the Trump administration.

Paul Bradshaw, Head of Global Sales and Listings at SGX, acknowledged the growing importance of Singapore as a gateway for Chinese businesses venturing abroad. "The gateway from China to the rest of the world will only become more important in the coming decades," Bradshaw stated. "Singapore is a vital conduit for trade and business activity from China to the external world, and listings on SGX are an important component of that flow." However, he refrained from commenting on specific listing plans of Chinese or Hong Kong-based companies.

In related market news, U.S. equities closed higher on Friday, with the Dow Jones Industrial Average gaining over 0.75%, the S&P 500 up by 0.7%, and the Nasdaq Composite advancing by 0.5%.

CGS International, the brokerage arm of Chinese state-backed China Galaxy Securities (601881.SS), is reportedly advising at least two of the Chinese companies exploring SGX listings, with potential timelines suggesting listings could occur as early as this year, according to So. He declined to name the specific companies.

One of the sources indicated that some of the mainland and Hong Kong firms are aiming to raise approximately $100 million USD through primary listings in Singapore.

Historically, the SGX has not been the primary destination for Chinese companies seeking offshore listings. Hong Kong, with its strong Beijing backing and a large pool of institutional and retail investors familiar with Chinese brands, has traditionally been the preferred choice for overseas debuts.

However, the escalating tensions with Washington are coinciding with Beijing's efforts to strengthen ties with Southeast Asian nations. This strategic pivot is prompting some Chinese companies to explore expanding their footprint in the region, making a Singapore listing an increasingly attractive option.

This potential influx of Chinese listings comes on the heels of the Singaporean government's announcement in February of measures designed to invigorate its local equity market. These initiatives include a 20% tax break for primary listings, with further market-boosting measures expected in the second half of 2025.

Ringo Choi, EY Asia-Pacific IPO Leader, anticipates that these government efforts will heighten interest in the local IPO market. He added that Singapore's "political stability and neutral stance on geopolitical issues" could be a significant draw for companies.

Despite this renewed interest, analysts remain cautious about Singapore's ability to quickly rival Hong Kong's listing volumes, citing the city-state's relatively conservative investor base and stringent listing requirements.

An executive at a Singapore-based multinational software company, who requested anonymity, suggested that "regulations need to be eased, especially to make it easier for tech companies to list." He further argued, "Most of the region's startup headquarters are here in Singapore, so this is where they should be listing."

The potential shift of Chinese companies towards the SGX underscores the challenges posed by the U.S.-China trade conflict and highlights Singapore's potential to emerge as an alternative major financial hub in Asia. The actual progress of these listing plans and their subsequent impact on both exchanges will be closely watched in the coming months.