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Oct 24, 2010
Getting a slice of the hot Asian IPO pie

How local investors can apply for foreign shares
By Harsha Jethnani

Mega IPOs in Asia continue to be the flavour of the month, with the most recent listing being that of AIA Group in Hong Kong.

Set to raise as much as $26 billion, it could be the world's second biggest initial public offering (IPO) this year. The biggest so far has been Brazilian oil company Petrobras' listing which raised US$67 billion (S$90 billion).

And following the enthusiastic response to Singapore's own mega listings - Global Logistic Properties and Mapletree Industrial Trust - it may well be worth an investor's while to look farther afield.

On the cards is the listing of Petronas Chemical Group in Malaysia which could raise up to US$4 billion. The retail offer is expected to be open from Oct 29 to Nov 9.

Only 2 per cent, or just under 50 million shares of the estimated 2.48 billion shares, will be open to retail investors, half of which is reserved for ethnic Malay or bumiputera investors.

Singapore investors who want to apply for foreign IPO shares can approach brokerage houses in Singapore which have a tie-up with the IPO manager, as they will be given an allocation of shares to be distributed to their clients.

The listings would also have to be international offerings with openings for retail buyers and no specific prohibitions.

Some countries, like Indonesia, place restrictions on the percentage of foreign ownership in controlled industries like telecommunications, Ms Serene Seow, head of equity capital markets at CIMB Bank Singapore, told The Sunday Times.

Investors can go through CIMB Securities in Singapore to apply for IPOs in Indonesia, Hong Kong, Thailand and Malaysia. The brokerage fee on IPO shares is usually 1 per cent, Ms Seow added, on top of which country-specific charges could be added. CIMB will act as the custodian for the investors' foreign shares, if successfully allotted.

Another option is to appoint a foreign broker in the market of interest, which is sometimes also the cheaper option.

Singaporeans looking to tap Hong Kong, for example, can open a trading account with an international broker like DBS Vickers. Investors can contact DBS Vickers' Hong Kong office for application forms to be sent via post.

Applicants can then get their documents and identities verified at DBS Vickers in Singapore, a spokesman for DBS Bank said.

Once the account is opened, DBS Vickers Hong Kong will assign a remisier to the customer.

Fees include a commission charge of 0.25 per cent on a minimum of a $100 transaction. Other charges include stamp duty at 0.1 per cent, trading fees at 0.005 per cent, levy of 0.003 per cent and settlement fees of 0.002 per cent.