Subscribe to receive new analysis by email
Going through SGX’s numbers for May released last night, it seems stock traders sold in May and went away. Hopefully they have not gone far and for long. Hope however, is not often the best strategy. Securities turnover reported for May was $23 billion, down 2% on year and 13% on month. Daily average value of trading was $1.1 billion, down 2% on year and 9% on month. Just for perspective, HK stock market turnover there on Tuesday earlier this week was HKD145 billion or approximately SGD25 billion. In fact there was a day in April when turnover on the Hong Kong Stock Exchange hit almost HKD300billion, more than twice the total value traded on the SGX for the entire month. Turnover on the HKSE has more or less tripled over the past few months, the key contributor to this drive has been the liberalisation of the Chinese capital markets, with the Shanghai-HK connect playing a big part in facilitating the flow of funds between the two exchanges. Over at SGX however, we look like a rudderless ship without a captain at the helm. Indeed, without a successor announce soon, this lackadaisical mood may continue for a while as most search for a direction with regards to the business of equity trading in Singapore. While it is easy to condemn the sombre mood from afar, let’s perhaps look at some suggestions that may be looked at for improvement going forward. First it is important for him or her-the new skipper- to assemble a credible and capable team. Next they need badly to reach out to the stakeholders of the game, most of whom remain disillusioned by the past couple of years of slow pickings. Specifically, remisors, stockbrokers, securities companies, investment banks, corporate finance teams and even corporates themselves have to be engaged and brought to the table to determine a plan, a plan with any fighting chance of helping revitalise the local stock markets and possibly bringing back its vibrancy. As an example, this could come in the form of a more aggressive approach to identify and attract not simply single, stand-alone companies, but industries (like for example the whole sector of REIT’s or S-Chips in the past) with companies within it’s ‘ecosystem’ that can attain a critical mass so that brokers in turn are able to commit resources to for research coverage. Then the education process can follow to engage brokers, remisors and the investment public on this new sector. While it may be easy to list a whole number of reasons for the reduced heart-beat in the local markets here, we believe that the most crippling factor for this listlessness is due to the knock on effects of the penny stock crash in the fourth quarter of 2013. Specifically, when ‘Blumont and gang’ lost a collective $14billion(approx.) in value that fateful week, the stock markets lost more than that amount if we were to factor in the multiplier effect that $14billion would normally have brought. This loss was largely capital belonging to traders most of whom offered the velocity of trades on most days here.
IMPORTANT NOTE AND DISCLAIMERS Market Opinions Any opinion(s), news, research, analyses, prices, or other information contained on this website / document is provided as general market commentary and are from publicly available resources or otherwise obtained, and does not constitute investment advice nor does it seek to market, endorse, recommend or promote any investment or financial product. CMC Markets Singapore Pte Ltd. (Reg No./UEN: 200605050E) (“CMC Markets”) will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Accuracy of Information The content is subject to change at any time without notice, and is provided for the sole purpose of assisting traders to make independent investment decisions. CMC Markets has taken reasonable measures to ensure the accuracy of the information, however, does not guarantee its accuracy, and will not accept liability for any loss or damage. CMC offers no financial advisory services in any of the content or vouch for the veracity of any information. Distribution The content of this publication is not intended for distribution, or use by, any person in any country where such distribution or use would be contrary to local law or regulation. None of the services or products referred to or mentioned are available to persons residing in any country where the provision of such services or investments would be contrary to local law or regulation. It is the responsibility of the reader to ascertain the terms of and comply with any local law or regulation to which they are subject. Third Parties CMC Markets may provide you with opportunities to link to, or otherwise use, sites and services offered through or by third-party(ies). Your use of these third-party services is subject to such terms as posted by these third-party(ies). We have no control over any third-party site or service and we are not responsible for any changes to any third-party service or for the contents thereof, including, without limitation, any links that may be contained in or accessible through such third-party service. These links are provided solely as a convenience to you. You will need to make your own independent judgment regarding your interaction with these third-party sites or services. Our inclusion of advertisements for, or links to, a third-party site or service does not constitute an endorsement of any of the representations, products or services listed therein. Important Note Each reader/recipient agrees and acknowledges that: (a) no express undertaking is given and none can be implied as to the accuracy or completeness of this document; (b) this document does not constitute in any way a solicitation nor incentive to sell or buy any Shares, Stock Options and Contracts For Difference (CFDs) and similar and assimilated products; (c) each reader/recipient of this document acknowledges and agrees to the fact that by its very nature, any investment in Shares, Stock Options, CFDs and similar and assimilated products is characterised by a certain degree of uncertainty; that consequently, any investment of this nature involves risks for which the reader/recipient is solely responsible and liable. It is to be noted that past performance is not necessarily indicative of future results. In this respect, past performance of a financial product do not guarantee any and are not an indication as to future performance; (d) the use and interpretation of this document require financial skill and judgement. Any utilisation whatsoever by the reader/recipient, relating to this document, as well as any decision which the reader/recipient may take regarding a possible purchase or sale of Shares, Stock Options, CFDs and similar and assimilated products, are the sole responsibility and liability of the reader/recipient who acknowledges and agrees to this as a condition precedent to and prior to any access to this document; (e) as a result of the above, all legal liability directly or indirectly arising whatsoever.