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Strategies & Market Trends : Singapore

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To: Tom who wrote ()	9/5/1997 4:01:00 AM
From: Tom	of 20

RE: EMAIL The difference between (F)oreign shares and (L)ocal shares. What is the reason for the dual listing of a company's shares? The government places a limitation on foreign ownership in companies it considers critical to the nation's economic stability. The dual listing provides a convenient method for tracking foreign ownership. Why is there such a difference in price between the F and L shares? Originally offered at a price par with the L shares, a premium is quickly attached to the F shares for two reasons. Only sovereign interests are permitted to trade the L shares. The F shares are made available to local and foreign investors alike. The global availability of the F shares means a larger number of investors will be competing for the shares. The competitive bidding will advance the price of the F shares beyond that of the L shares. The currency offered in settlement by the foreign investor also lends to the premium paid for the F shares. Simple exchange rate arithmetic shows a greater portion of the available F shares can be accumulated by foreign investors when their native currency has a greater forex value than that of the local currency. This advantage is often manifested in a more casual attitude over the market price of the shares. As the cycle of transactions builds away from the initial offering, the fractional concern over the share price becomes additive until a whopping premium develops. Also, the greed factor can never be discounted. Why can't I find the ticker symbol? Example: Singapore Airlines trades locally as SIA. The foreign shares are assigned SIA-F. The shares trade OTC in the U.S. and, therefor, must carry an appropriate ticker symbol. Singapore Airlines trades in the U.S. OTC market as SPANF. Is Singapore Airlines a buy at this time? All I am able to say is that I began bidding the shares as they passed below US$8.00, expecting at least a 25% return within six months. It's been reported that the actual value of SIA is displayed in the price of the foreign shares, not the local shares. Should the F shares and L shares be combined into one listing, the price will eventually settle nearer that of the former F shares. Data as of June 30, 1997 SIA Shares: 962m (Local and Foreign) Price : S$7.25 P/E : 9.00

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