Why start-ups like to set up in Singapore but list in Hong Kong

Singapore could be where start-ups prefer to set up shop, but Hong Kong is the market that they want to list in, according to analysts and industry players.

“Singapore government has introduced many measures to support start-ups, which is why it has attracted many new companies to set up there. However, these start-ups would get bigger and want to go public, Hong Kong is a better choice as the overall market size and new listing activities are more active in Hong Kong than in Singapore,” said Joseph Tong Tang, chairman of Morton Securities.

Hong Kong has lagged behind Singapore in terms of drawing start-ups to establish on its turf. The latest case is Lujiazui International Financial Asset Exchange, or Lufax, the peer-to-peer lender that was established by Hong Kong and Shanghai-listed Ping An Insurance in 2011.

The firm was last month given the green light to launch a global wealth management platform by the Monetary Authority of Singapore.

Still, the overall Hong Kong IPO market is more robust. It has raised four times more funds than Singapore so far this year, totalling US$8 billion in 92 IPOs. The island republic has raised only US$2 billion from 13 IPOs, according to Thomson Reuters data.

Hong Kong is the world’s fourth-largest IPO market worldwide while Singapore is not even in the top 10 list. But the flip side is Hong Kong is losing out in the amount of funds raised from technology IPOs as Singapore is ranked fifth, while the city is in the 12th position.

This is because the majority of funds raised in Hong Kong IPOs were from traditional firms with financial firms representing 56 per cent of all IPO funds raised this year, while technology firms only represented 5.8 per cent, according to Thomson Reuters data.