As Trade Woes Persist on Asia Stock Markets, Singapore Allows Dual-Class Shares
Southeast Asian stock markets fell on Tuesday as escalating trade tensions between the United States and other major economies prompted investors to reduce exposure to riskier assets, causing a global equity rout.
Broader Asian shares fell as Wall Street retreated overnight, with technology stocks posting steep losses, after reports that the U.S. Treasury Department was drafting curbs to block Chinese investment in U.S. tech firms, although Treasury Secretary Steven Mnuchin later clarified that restrictions would not specifically apply to China.
Safe havens such as the Japanese yen and gold saw increased buying, while U.S. long-dated treasuries also rose overnight.
"Reports that Treasury is preparing rules to curb Chinese investment in U.S. technology companies were not off the mark. Mnuchin affirmed that investment restrictions will apply to all countries trying to steal U.S. technology, with China an obvious target," Mizuho said in a research note.
"This could reduce scope for corporate synergies, and potentially incite new Chinese retaliation, thus negatively affecting growth."
Vietnam shares slumped as much as 2 percent, led by losses in financials and real estate stocks.
Joint Stock Commercial Bank for Foreign Trade of Viet Nam lost about 1.4 percent, while property developer Vingroup JSC lost more than 2 percent.
Philippine shares were set to extend losses into a ninth straight session, as industrials and financials such as SM Investments Corp. and Metropolitan Bank and Trust Co. declined.
Singapore stocks dropped 0.7 percent to their lowest since October, with Oversea-Chinese Banking Corp. among the top declining stocks.
Singapore Lures Firms With Dual-Class Shares
Singapore Exchange (SGX) launched new rules on Tuesday to allow firms to list with dual-class shares, shortly after rival Hong Kong exchange introduced such funding structures favoured by tech firms.
Dual-class shares offer extra voting power to top executives seen as protection against pressure for short-term returns, but have faced criticism by corporate governance activists who have warned the structure could be abused by company insiders.
Their introduction in Asia puts the region on a more even footing with New York, which has managed to attract more Chinese tech initial public offerings via the structure.
"SGX today joins global exchanges in Canada, Europe, and the U.S., where companies led by founder-entrepreneurs who require funding for a rapid ramp-up of the business while retaining the ability to execute on a long-term strategy, are able to list," said Loh Boon Chye, CEO of SGX.
The rules are effective immediately, SGX said.
Hong Kong Exchanges and Clearing Ltd. launched its new rules from April 30, designed to attract companies with a market cap of not less than HK$10 billion ($1.27 billion) while Singapore will allow firms valued at S$300 million ($229 million) to list with dual-class shares.
Singapore on Tuesday set out various rules for dual listings designed to safeguard investors.
They include an equal voting process on issues such as removing directors, variation of shareholder rights, and takeovers, and limiting holders of so-called &`#`39;multi-vote&`#`39; shares to certain named individuals.