SGX stocks in crisis
Lifetime Membership SGX stocks are in a state of crisis. So bad that the Monetary Authority of Singapore (MAS) has recently announced a whole-of-government strategic review to revive the ailing stock market of Singapore. Obviously, the abysmal state of SGX stocks is not something new to active Singapore investors. What is startling to most investors is that it takes such a drastic huge decline of SGX to trigger a last-gasp action from the authorities.
My biggest concern is that the strategic review to revive SGX stocks may come too late, and too little. Unless something bold is quickly done, the damage inflicted could have been irreversible and we may never see the SGX of old again. What is even more galling to me is that MAS has decided to take a chillax approach and announced that the review would take one year to complete. What?! One year to complete a review report? In the stock market, one year is an eternity! By the time the plan is executed, SGX would likely be “gone with the wind”.
From “Asian Gateway”, SGX stocks have become laughing stocks of Asia as there was only one miserable SGX IPO in the first half of 2024. The company, Singapore Institute of Advanced Medicine (SAM) Holdings, took a leap of faith with SGX but raised just a tiny little $20 million from the IPO. Then again, given the prevailing poor valuations of SGX stocks, which CEOs would risk listing their companies in SGX? In recent years, a number of Singapore-based firms has chosen to snub SGX and got listed in foreign stock bourses instead. This included Haidilao, Ryde, Grab and Mirxes.
If the argument from SGX is that the lack of quality listings is due to the challenging operating conditions, then why is it that Hong Kong has managed to garner 68 listings in 2023 vis-à-vis the 6 listings in SGX over the same period? Even Malaysia, Indonesia and Thailand stock bourses have fared better than SGX in the first half of 2024. The matter of fact is that there is a serious lack of pipeline of quality companies to list here. And we are talking about a developed market in the financial hub of Asia.
Looking back, I had been blogging about SGX stocks for more than 14 years. During this period, I noticed a worrying trend concerning the waning interests among investors in SGX stocks. Apart from that, I have also read many cautionary tales of retail investors losing their hard-earned monies investing in SGX stocks. Various factors include poor valuations, de-listings at cut-throat exit offers and absurd corporate governance resulting in negative returns for investors.
The past two years were particularly challenging as many SGX stocks effectively turned into zombies – stocks with poor liquidity and low valuations. Perhaps the mighty storm of the China stock market has shaken investors’ confidence in Asia Pacific market. Even S-REITs and blue chips like Singtel and Wilmar have been in terrible forms. Of course, there are winners among the SGX stocks, like Sembcorp Industries and Keppel Corp but they are exceptional cases rather than the norm.
Just a word of disclaimer: I am vested in some of the SGX stocks covered in this article. As such, my views may be biased towards these counters. Please do your due diligence or engage financial advisors before investing in the stock market. This article is also not meant to induce readers to make any form of investment decisions.
What should be done for SGX stocks?
One of the biggest mysteries of the strategic review by MAS is that it only includes representatives mostly from the government sectors, SGX and business associations. The narrative I sense is all about raising capital for companies through primary and secondary listings in SGX. The review group did not include representatives from retail investors nor SIAS, the largest investor association in Singapore. In view of this, I do think that the structure of the review group is likely to lead to group-think, and nothing bold or transformative would come out of the review. If so, it will be the biggest missed opportunity for Singapore to revive SGX from the perennial coma.
To be fair to SGX, it did come out with several initiatives over the years to attract listings, such as the introduction of dual-class voting shares in 2018 and SPAC in 2023. However, the bourse did not engage the local investment community when it implemented these initiatives, resulting in these initiatives becoming white elephants. In the case of SPAC, the move caused more harm than good as the share of 17live, the first company which got listed through SPAC, declined more than 50% since its debut.
By not engaging SIAS, retail investors and local investment bloggers, SGX and MAS have not learned their lessons from yesteryear. Since they have chosen to snub the local investment bloggers, I shall pen down my recommendations to nurse SGX back to health. Here goes.
Temasek Holdings and GIC: In response to calls for GIC to invest in local listed companies, Minister Chee Hong Tat previously [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.]
For members of SG Wealth Builder logging in from Apple or Mac devices, please access through this link. This allows for one-time log in only (instead of having to key in user-id and password twice).
Congratulations on your first step to becoming part of SG Wealth Builder community! For a one-off payment of $100, you can get full access to all the articles and enjoy the benefits of SG Wealth Builder Membership.
The full benefits and privileges of SG Wealth Builder Membership:
- Access to the latest premium articles of SG Wealth Builder
- Email notifications of latest blog articles
- Request for coverage on stocks, insurance and other personal financial topics
- Comment in articles
Note: After payment is made, you will be prompted with registration form to create your user-id and personal password.
