I am pleased and honored to be here today to say a few words under the finance and banking segment of this Conference.
It is well known that Singapore has been assiduously courting India for almost two decades. Those efforts have borne fruit. India has modulated its infatuation with the West, turned its gaze to the East as well, and now is taking its rightful place in South-East Asia and elsewhere. India has entered into, or is negotiating, free trade and other agreements with Singapore, other South-East Asian countries, and ASEAN itself.
One prominent result is a sharp increase in trade and mutual investments. Particularly noteworthy is the large number of Indian companies -- small, medium and large -- estimated to exceed three thousand, that have set up shop in Singapore. These entities recognise the vast potential to be tapped through using Singapore as the spring-board for their diverse activities in the region and beyond.
Not the least important of Singapore’s attractiveness is the highly developed nature of its financial sector, including the capital markets and related professional services. It is appropriate therefore that a segment of this conference has been devoted to that area.
May I make some brief comments on the capital market in Singapore and SGX’s role in it. SGX is a vertically-integrated and horizontally-diversified exchange, covering the entire spectrum of activities: from listing, trading and clearing through to settlement and depository. SGX offers these services in the securities, derivatives and commodity segments.
The character of SGX’s business is truly international, with some 45% of its trading being in foreign stocks or derivatives. That share has been growing rapidly in recent years, and will continue to expand. Noteable among the contracts we offer on our derivatives market is the Nifty Futures, franchised from the National Stock Exchange of India. The Nifty is one of the most active products in our market. In the past fifteen months it has been the fastest growing contract on our Exchange. Besides offering the Nifty, SGX lists two India-related ETFs, or Exchange Traded Funds, on our equities board. They are the S&P Nifty ETF and the iShares MSCI India ETF, in both of which we have seen rapid growth in trading.
SGX has not been too successful in attracting Indian corporations to list on our board. One reason could be the well-developed capital markets in India. But a stronger factor could be the restrictive nature of regulations that require Indian companies to first list on an Indian exchange. So we’ll be patient, and await further liberalisation of Indian regulations. Nonetheless, SGX has been successful in attracting Indian GDRs, or Global Depository Receipts, as well as business trusts with assets in India. In addition, we have a large number of Indian-origin bonds listed on SGX.
We expect that in the years to come, as the Indian economy grows and liberalisation proceeds apace, there will be excellent opportunities for SGX to help Indian companies to tap international markets for funding their investments, besides offering them wider exposure in their trading activities.
Recognising the vast potential of the Indian market, SGX took a 5% stake last year in the Bombay Stock Exchange, the current maximum that a foreign exchange is permitted to invest in an Indian Exchange. We hope to rapidly develop our linkages with the BSE to our mutual benefit and in the interest of Indian corporations and investors.
With those brief remarks may I hand you over to the distinguished panel that has been assembled to talk in depth on this interesting subject of finance and banking in the context of India - Singapore relations.
