Dear readers, for far too long, we have heard or read about how quite a number of local (Singapore) investors have expressed frustration, disappointment at just how unattractive the Singapore stocks markets are.
Some of the investors have lost monies investing in what seems to be once-promising small caps or into S-chip stocks, during the S-chip stock saga that affected the Singapore stocks markets a decade back or so. Even investors who invested in stocks that were part of the Straits Times Index have lost big time: one example of a former STI stock which has done badly in terms of stock performance was Noble Group stock.
Even if we are to brush all these what seems to be anecdotal accounts aside, if we are to compare the Straits Times Index (STI) with the US stock indices, the US stock indices have surpassed the STI by a large margin in the past 5 years and this is an objective fact that the Singapore stock markets are not attractive in terms of capital gains for investors, as compared to its regional or international peers.
But for supporters of the Singapore stocks markets, the relatively flat performance of the STI in years were touted in terms of a positive attribute: that of the Singapore stocks markets being defensive!
Today’s (6 July 2024) The Straits Times reported that Singapore is the worst IPO performer in the region with only 1 listing in the 1st half of 2024 (and this was down from 3 in the 1st half 2023). Thailand and Malaysia are the region’s best performer, attracting respectively 25 and 21 IPOs in 1st half 2024. The 1 IPO for Singapore in 1st half of 2024 (Singapore Institute of Advanced Medicine Holdings), raised just US$20 million which is much below the US$450 million raised for the IPOs in Malaysia for the same period. The above IPO statistics shows that the Singapore stocks markets are also not attractive for companies to carry out their IPO here.
Even if companies do choose to IPO and list in Singapore stock markets, they would need to be prepared that their stock prices may not necessary do well.
For example, for Singapore Institute of Advanced Medicine Holdings stock (the 1 IPO for Singapore in 1st half this year), the stock IPO price was at S$0.23 and closed at S$0.19 (down 17.4% from IPO price) on the 1st day of its trading on 16 Feb 2024. From the price of S$0.19 on its 1st day of trading, the stock has since declined by around 47.4% since IPO to S$0.10 (as of 5 Jul 2024).
Mr Chee Hong Tat who is Transport Minister and Second Minister for Finance has said recently that investments from Singapore’s GIC, as what some have suggested is “not the solution” to shake up Singapore’s stock markets, but that the ability to attractive good and quality companies to list in Singapore is one of the key initiatives to continue to make the Singapore stocks markets attractive.
On a personal note, I would think as of now, the Singapore stock markets are only attractive provided that investors invest in selective stocks as some of these selective stocks do still perform well. And it is also important to research well those small-cap stocks which tend to attract investors with a growth story.