Trust building has to go alongside MAS-led moves to revive SGX

Trading on the Singapore Exchange (SGX) has increased in the weeks after a Monetary Authority of Singapore (MAS)-led equities market review group on Feb 21 announced a series of measures to revitalise the local stock market.

- Kang Wan Chern

Almost 30 billion shares were traded in February, a 56 per cent jump from January, while the total market value of all transactions for the month was up 42 per cent to $29.6 billion over the same period, according to SGX.

The steps involved include allocating an initial $5 billion to invest, alongside selected Singapore-focused fund managers, in local stocks, as well as extending tax incentives and streamlining regulations to attract new listings.

Temasek chief executive Dilhan Pillay described the measures as the most significant for the local stock market in over 30 years.

But the current moves focus on boosting institutional investments and attracting higher-quality IPOs, and have yet to sustainably address a critical component that will help boost shareholder returns and keep the current momentum going – retail investor trust and confidence.

To be sure, MAS has said it is exploring ways to enhance investor recourse avenues and improve engagement between shareholders and listed companies. Further updates are expected in the coming months.

Still, there is a need to accelerate these efforts and expand them to include legal options for investors who have been burnt in the stock market and strengthen minority shareholder protections to prevent investor trust from eroding, even as broader market reforms take shape.

This will be essential in tackling the SGX’s struggle with low liquidity and weakening investor sentiment, factors which have led to suboptimal valuations, discouraged new listings and contributed to a spike in the number of companies choosing to leave the exchange.

The ongoing dispute between some shareholders of Great Eastern (GE) and OCBC is one example of the lack of avenues for some minority shareholders to negotiate better terms for themselves.