S'pore 'lacks committed local investors'

S'pore 'lacks committed local investors'



Mr Aaron Howell forecasts that with oil prices low, higher-quality assets will emerge in the market. 

THE lack of activity in Singapore's capital markets is partly due to the lack of an established bedrock of committed local investors, senior bank executives said yesterday.

Ms Claire Suddens-Spiers told a roundtable discussion: "Who are the domestic investors here?

"They are global funds that are present in the market and, therefore, don't have a vested interest in necessarily making the market work."

She also said there was a need for greater diversification, given that Singapore's economy is largely driven by real estate investment trusts.

"Although (Singapore) is a relatively mature market, it is not yet a sophisticated market," added Ms Suddens-Spiers, Rothschild's head of South-east Asia and its Asian equity advisory.

While she does not see any "short-term catalyst" that can attract more investments, she spoke of "bright spots in the mid- and long term".

One of the positive factors is Singapore's potential to continue to be the "natural answer" to neighbouring countries like Vietnam, should they seek to access capital. This is unlikely to be hindered by the current outlook.

The discussion, which focused on the firm's advisory services, also included Mr Aaron Howell, Rothschild's head of oil and gas in Asia, who looked at trends in the global energy industry.

He forecasts that with oil prices remaining low, higher-quality assets would emerge for sale in the market.

"Sellers are taking a more mature look... Activity and discussion are high, and people are looking at higher-quality deals" that can be completed, he noted.

As industry giants review their portfolios, Mr Howell believes they will release mature assets, namely "smaller-scale, development-ready oil or gas projects as opposed to highly mature end-of-life properties' oil and gas fields".

This strategy will enable large companies to be more efficient, while allowing smaller, niche companies to take over.

Rothschild has 25 bank executives based in South-east Asia who are purely advisory. Advice on mergers and acquisitions comprises 80 to 90 per cent of its business dealings in the region.

However, Ms Suddens-Spiers noted, local businesses do not always perceive equity advisory as a necessity because "people are still unclear about the role advisers play".

The Straits Times / Money                                Published on Wednesday, 18 March 2015

By Phyllis Ho                                                     hphyllis@sph.com.sg