LIFETIME MEMBERSHIP Can CEO Loh Boon Chye make Singapore Exchange great again? Since the onset of the pandemic, SGX share price (SGX: S68) rocketed from a low of $8.20 in July 2020 to a mighty high of $12.05 on 4 August 2021. The bubble finally burst for SGX share price (SGX: S68) when the bourse announced a full-year financial result that saw net profit dropping 6% on year-on-year basis. While the drop is not alarming, the market reacted – SGX share price (SGX: S68) crashed by a staggering 18% by the end of August from the high of $12.05.
To put things into perspective, SGX share price (SGX: S68) thrives on crisis. In fact, the previous record high of SGX share price (SGX: S68) was $15.90 recorded in October 2007. That was the period of the Great Financial Crisis. Back in 2007, the average daily trading value was $1.6 billion and there were 46 new equity listings. Fast forward 14 years later, the average daily trading value shrunk to $1.4 billion while there were only 10 equity listings.
Yet the most worrisome thing about SGX share price (SGX: S68) is not really the short-term volatility. Rather, it is the devastating long-term decline of SGX that gives investors the jitters. Being a financial hub, it is a given that Singapore has a vibrant stock exchange to stay competitive in the region. Yet the dearth of IPOs and the horrifying valuations of listed companies in Singapore led to a slew of delisting in SGX in recent years.
Although SGX’s decline has been on-going for a long time, the decline was notably significant since 2015, which coincided with the departure of the previous CEO Magnus Bocker. When CEO Loh Boon Chye took over the helm, SGX was already struggling to deal with the fallout from the series of S-chip scandals in Singapore. In a bid to revive SGX share price (SGX: S68), Loh pivoted SGX in bond listings and derivatives. In FY2021, there were 795 bond listings while there were 11 equity listings.
While Loh’s strategy is not flawed, it should be highlighted that stock exchanges will always be judged based on their equity IPO listings. A look at SGX’s close competitor, Hong Kong Stock Exchange (HKEX) validates this point. Under Loh’s tenure, the gap between SGX and HKEX has widened so much that the latter is in a different league of its own. For illustration, HKEX recorded a stunning 46 IPOs in the first half of 2021 while SGX only achieved a paltry of only 3 IPOs in the same period. In view of this, most companies now view US or Hong Kong as the destination of choice for equity listing. This development has massive implications for the outlook of SGX share price (SGX: S68).
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in SGX before. Whether SGX share price (SGX: S68) will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
SGX share price (SGX: S68) faces destiny
Evidently, the current SGX share price (SGX: S68) is not sustainable as the crisis of confidence in SGX continues to unfold. The explosive form of SGX share price (SGX: S68) from 2020 until today was due to spike in trading caused by investors working from home. However, as we enter endemic, trading activities will likely cool as people return to offices. Even if this is not the case, interest in SGX stocks will also decrease as US and HK stock markets continue to dominate investors’ interest. For these reasons, I expect SGX share price (SGX: S68) to normalize to a dismal[This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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