Catalist: Too little, too late?




Apparently timing is not everything. Despite the turmoil in the financial markets, the Singapore Exchange has pressed ahead with Catalist, the new board that now replaces SGX’s junior board SESDAQ. Emulating the flexible regulatory system of London’s Alternative Investment Market (AIM), Catalist is part of SGX’s strategy to provide growing firms with a viable Asian listing and an alternative to the AIM.

The big question though is, how attractive will Catalist ultimately be? Will the looser regulatory standards put off firms and investors? Catalist’s forerunner, AIM had been criticized for its lax regulation and advisor conflicts of interest, the very freedom that attracted companies to it in the first place. Notably, US securities regulator Roel Campos said that “I’m concerned that 30% of issuers that list on AIM are gone in a year. That feels like a casino to me and I believe that investors will treat it as such.”

According to corporate finance lawyer Robson Lee, “At the start, Catalist aspirants may be confused by the different standards imposed by different houses, and this could pose challenges to the integrity of Catalist when listing candidates may flock towards houses which are more lax in their requirements.”

Good Signs

There are reasons to look on the bright side though. Initial response, according to Mr Lawrence Wong, Executive Vice President and Head of Listings SGX, has been good, “we have received numerous enquires from potential listed companies about Catalist”.

In London, AIM has raised more than 35 billion pounds for the 2500 companies that have listed there since 1995, and has attracted strong institutional interest- 56% of all investors in 2007 were institutional investors. The AIM market appears to be sustainable too, with more than 40% of the money that has ever been raised coming through further issues.

Catalist has the tools to compete with, not merely emulate, AIM. Besides the lighter regulatory touch that means an easier listing process and lower compliance costs for the companies, Catalist offers listing fees that are at least 33% lower than AIM, starting at $15,000 and capped at $50,000. Also, a Catalist company has the market facility to raise more funds than in AIM—up to 100% of its original share capital on a rights basis. Catalist’s biggest advantage, however, is that most trading interest in Asian stocks has stayed in Asia, and Singapore is in the same time zone as most investors, unlike AIM in London. The faster listing time in Catalist (6 weeks) compared to 17 weeks previously on SESDAQ can only be a further plus.

And going back to the issue of regulatory standards, SGX seems confident of maintaining market quality, with SGX chief Hsieh Fu Hua emphasizing that companies on the new board would be held to the same standards as those on the main board and that SGX “retains the power to discipline and ultimate accountability”. As Mr Lee commented, “There’s no water tight regulatory system” but “in Singapore, you have a balance; regulation with a lighter touch but strict enforcement.”

Will Catalist strike the right balance?

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Will BMW overcome its CleanEnergy hurdle?




BMW recently flexed its ‘renewable muscle’ by bringing in five Hydrogen 7 cars into Singapore as part of an ongoing world tour. The cars, endorsed by celebrities like Madonna and Arnold Schwarzenegger, rely on liquid hydrogen as fuel, which BMW contends is the only way of achieving mobility ideally free of carbon dioxide emissions.

“We want to share this technology with Singapore because the country has a very clear vision of the central importance of clean energy in the overall national development plan,” said Roland Krueger, Managing Director of BMW Asia.

Performance wise, the cars boast an acceleration from zero to 100 kilometres in ten seconds, with a top speed limited to 230 kilometres, but not everyone is impressed.

Are these cars viable?

Ron Tan, Global Marketing Director at Infernofuel Global bristles when asked if these alternative forms of transport will help Singapore realise its dreams of zero carbon emissions by 2020.

“What is the point of having a hydrogen-powered car when the infrastructure is not in place,” he retorts. For the launch, BMW brought in a mobile refuelling station, complete with support crews as there is only one hydrogen fuelling station in Singapore supporting BMW’s technology. Tan also questions their affordability.

“How many Singaporeans can buy a BMW 7 Series car running on hydrogen?” Instead, he believes motorists need to address fuel efficiency by using good air filters and low resistance tyres. “Those measures will allow cars to get more mileage out of every litre of fuel used.”

Michael Meurer, who heads BMW’s CleanEnergy Programme admits that a complete change from a fossil fuel infrastructure to a hydrogen economy will take time, but points out that the advantages cannot be ignored.

“The BMW Hydrogen 7 emits nothing but vapour, which allows the cycle to repeat itself. This means that sustainable mobility without using fossil fuel resources can become a reality,” he said.

And according to Meurer, unlike fossil fuels, hydrogen is readily available. “It can be obtained from water and renewable energy such as the sun, wind or hydropower.”

Temperatures are rising
Tan believes that BMW’s intentions are admirable but unrealistic. He points to a recent report by the Intergovernmental Panel on Climate Change (IPCC), which states that global temperatures will increase by almost two degrees by 2020. “At best, people can only contain the problem, not solve it,” said Tan.

Sticking to its guns

Understandably, Tan’s views are not shared by BMW, which continues to remain passionate about its CleanEnergy programme, believing that it will open up a new era for automobiles with alternative drive technologies.

“Broad market penetration will require many more years of commitment from all partners in business, politics and industry. It’s a marathon, not a sprint,” said Krueger.

Will broad market penetration eventually become a realistic goal?

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Why is Wyeth bucking the trend of manufacturing leaving Singapore?




Wyeth will spend $96 million to expand a factory in Singapore for producing infant formula and milk powder, completing a $500 million capital improvement program in Asia.

The expansion will increase capacity at Madison, New Jersey-based Wyeth's Singapore plant by 50 percent, the company said in a statement distributed by PRNewswire. The factory will make the Progress and Promise brands of infant formula and milk products for sale in Singapore and the Asia-Pacific region, where sales climbed 20 percent last year, said Tom Mulqueen, vice president of global operations for Wyeth's nutrition unit.

“The demand is being driven by the economic emergence of developing nations that we're dealing with,” Mulqueen said by phone. Sales in China climbed 38 percent last year, he said.

The sale of fake milk formula in some of China's poor areas, combined with the increasing affluence of the world's most populous nation, has contributed to a surge in China's milk formula market, which may almost double in the five years through 2009, according to a report published by Euromonitor International in 2005.

Wyeth is also spending $280 million building a factory in China to make its infant formula, milk powder and nutritional products, it said in a March 10 statement. It's spending about $120 million more on a factory in the Philippines, Mulqueen said.

Mulqueen said he expects to increase staff at the Singapore plant by about 40 percent, adding about 100 more employees. The factory will start full commercial production by November next year, he said.

Sales outside the US and UK, including Asia, increased to $9.68 billion last year, representing 43 percent of Wyeth's revenue.

With a US recession looming, will Asia sales help Wyeth to pull through?

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Will CapitaLand’s focus on China work?




CapitaLand Chief Executive Officer Liew Mun Leong will take a more direct role in the company's China and residential units as Southeast Asia's largest developer focuses on those markets to bolster growth.

Lim Ming Yan, CEO of the company's China business, and Patricia Chia, head of its Singapore residential unit, will report directly to Liew from April 1, CapitaLand said in a statement to the Singapore stock exchange. Lui Chong Chee, to whom Lim and Chia had reported, will become head of financial services. Lui's former position as CEO of residential is no longer needed with the “flattened organizational structure.”

CapitaLand's fourth-quarter earnings jumped 49 percent as it sold more homes in its three biggest markets -- China, Singapore and Australia. The developer, which has properties in more than 90 cities worldwide, is turning to faster-growing markets outside Singapore, where home prices may struggle to match last year's 31 percent increase.

“It's a reflection of how quickly the business of China and Singapore homes have grown and how important they have become,” Vikrant Pandey, an analyst with UOB Kay Hian in Singapore.

“I view this as a positive signal in the sense that they are putting the emphasis on fast-growing segments.”

Pua Seck Guan, CEO of the company's retail unit, will relinquish his role as co-chief of the financial services unit and focus on expanding the group's mall business in Singapore and abroad, CapitaLand said. The company expects to open 20 shopping malls in China this year and build as many as three properties in the country under its Raffles City brand.

How will the current credit crunch affect Capitaland’s plans?

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