Singapore Exchange Limited (SGX: S68), or SGX, is working hard to introduce more investment choices for investors.

Back in July 2023, the bourse operator introduced its first set of three Thai stocks under a new product called Singapore Depository Receipts (SDRs).

Then, almost a year later in April 2024, SGX added five more Thai blue-chip stocks to this list, expanding investor access to a total of eight Thai stocks.

SGX quickly followed up with the introduction of five Hong Kong (HK) SDRs just seven months later.

The time for the introduction of new stocks has been further shortened as SGX just launched another three HK SDRs just four months after it introduced its first five HK SDRs.

Let’s find out more about these three new additions and the benefits you can enjoy from purchasing SDRs.

Three additional HK stocks

SGX has launched HK SDRs for three more stocks – Xiaomi (SGX: HXXD), Meituan (SGX: HMTD) and Ping An (SGX: HPAD).

Xiaomi is the world’s third-largest smartphone vendor that recently reported a strong set of earnings.

For the third quarter of 2024 (3Q 2024), Xiaomi saw revenue surge 30.5% year on year to RMB 92.5 billion.

Operating profit improved by 20.6% year on year to RMB 6 billion while net profit increased by 9.7% year on year to RMB 5.3 billion.

Meituan is the largest online food delivery company in China and intends to expand its food delivery services globally.

For 3Q 2024, the company saw a 22.4% year-on-year increase in revenue to RMB 93.6 billion.

Operating profit catapulted 307.5% year on year to RMB 13.7 billion and net profit more than tripled year on year to RMB 12.9 billion.

As for Ping An, it is a leading integrated provider of financial, healthcare, and eldercare services in China.

Ping An reported a commendable set of earnings for the first nine months of 2024.

Revenue rose 8.7% year on year to RMB 861.8 billion while net profit climbed 36.2% year on year to RMB 119.2 billion.

4 key benefits of SDRs

With the addition of three more HK SDRs, SGX now offers a total of eight HK SDRs that cover more than 40% of the Hang Seng Index in three key sectors – financials, technology, and consumer.

But why should you invest in a HK SDR compared with investing directly in a Hong Kong-listed H-share?

The graphic below explains four key reasons for doing so.

Source: SGX’s Presentation Slides

The first, and most important reason of all, is that you can invest in these eight large-cap stocks with a much smaller capital outlay.

For Xiaomi, the minimum amount you need to invest in the company is just S$385, much lower than the S$1,500+ if you purchased it in the Hong Kong Stock Exchange (HKSE).

For Ping An, this amount is S$398 or just 10% of what is needed to invest in the company on HKSE.

SDRs are also trading in Singapore Dollars (SGD), thereby eliminating the need for currency conversions.

As SDRs are custodised with the Central Depository Pte Ltd (CDP), all dividends are also paid in SGD.

Investors need not incur foreign exchange conversion charges and also pay lower brokerage fees compared to purchasing directly from HKSE.

There are also no custody charges as the SDRs are parked with CDP and you will not require a custodian to hold these shares.

An additional benefit is that investors can trade in SDRS outside of HKSE opening hours, which range from 9:30 a.m. to 4 p.m.

SGX is open for trading from 9 a.m. to 5 p.m., which means investors have an additional window of 1.5 hours to place their trades.

Increasing exposure to more companies and industries

With the introduction of Xiaomi, Meituan and Ping An as the three new SDRs, SGX is offering increased exposure to booming industries such as artificial intelligence (AI) transformation and electric vehicle (EV) transition.

Previously, only Alibaba (SGX: HBBD) and Tencent (SGX: HTCD) in HK could gain you exposure to the AI sector but there are now two additional names.

For the EV transition theme, SGX previously only had one name in HK – BYD (SGX: HYDD).

Investors will surely welcome this increase in options to invest in nascent industries that are seeing interesting developments.

Get Smart: A laudable move with more to come?

SGX should be lauded for steadily increasing the number of SDRs over time.

From an initial five Thai SDRs, the exchange now boasts a diversified shelf of eight Thai SDRs along with eight HK SDRs.

Investors can now diversify their portfolios even better with the increase in options.

Could there be more to come as SGX explores possible new venues for SDRs? The bourse operator may even be planning to add more stocks from Thailand and HK into its SDR shelf.

Stay tuned and watch this space to find out more!

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