Dear readers, the Singapore Exchange Ltd (SGX) stock is now of focus, after it declined by 5.79% yesterday.
What happened?
The general market view online was that the market and investors were not quite impressed by the initial measures announced, by the MAS review committee to boost the local bourse. This led to the sell down in SGX stock. I have shared my analysis of the initial measures to boost the local bourse here, be sure to read it.
Following the announcement of the initial measures, the share prices of the three biggest banks were not significantly impacted as expected given the bank stocks perceived to more than able to hold their own.
DBS: -0.49%
OCBC: 0.29%
UOB: 1.09%
Singapore Stocks Markets and SGX
SGX is both a listed company and a regulator of the local stock market. As a layman retail investor, my perception and expectation of SGX is very simple, that it continues to make the Singapore stock markets a venue where many retail investors can grow their wealth.
As previously shared, I believe the Singapore stocks markets may not be attractive to retail investors simply because they might have lost money investing in the Singapore stocks markets. Be it investing in the bigger name stocks (like NOL, Noble Group, Hyflux) or in former S-chip or penny stocks, many could have lost their monies. And then as the saying goes, once bitten, twice shy.
Also, previously shared, the three challenges of the Singapore stocks markets are as follows:
Singapore has passed the stages of rapid industrialisation and hence the heydays of many once good performing stocks like the telcos are over.
Singapore’s domestic market is small and limited, there is a certain limit to how SGX-listed homebased companies can grow.
Once Singapore’s SGX-listed companies venture abroad for a bigger market, there are bound to be risks that the companies have to navigate for better or worse.
Surprising note
In terms of capital gain performance, SGX stock was up by around 36% year-on-year and this was more than double the 17% capital gain performance of the Straits Times Index (STI), the benchmark of Singapore stocks markets. The STI performance would have been lower if not for the stellar performance of the 3 big banks (DBS, OCBC and UOB) in their share performance last year.
I believe the above comparison shows how investors in SGX stock assess the stock more on its own merits as a listed entity, rather than how well SGX manages the local bourse here.
Expectations
I believe the SGX has an overall ambit in managing the performance of the Singapore stocks markets. And I look forward to more specific measures from the MAS review committee on the local stock markets.