Dear readers, it was reported yesterday that SGX would scrap the mandatory quarterly reporting with effect from early February 2020. Instead, companies with a certain level of risk would have to continue with the quarterly reporting. When I learnt of this proposed move, my first thinking was that this is not a good move though this proposed move is really some time in the making. I know that this proposed move was part of encouraging the Singaporean investors to invest in stocks for the longer horizon rather than reacting to every piece of financial piece of reporting. But I still think this scrapping of the quarterly reporting is not a good move and these are the three reasons:
First, the scrapping of the quarterly reporting would make the already quiet Singapore stocks markets even quieter. A quarterly reporting which announces good or bad results of listed companies makes for a good turnaround as investors buy and sell in tandem with the result of the quarterly reporting. A reduced frequency of reporting will just make the markets even less exciting.
Second, linked to the first point is that a quarterly reporting will cause more opportunities for investors to buy into a good stock. Imagine if a good company, for just a quarter reports bad results which in turn leads to depressed stock prices. A depressed stock price will be good opportunity points for long-term investors to load up on these stocks.
Third, investors should already know which stocks are a bit riskier. Having companies with a certain level of risk report on a mandatory quarterly basis should not matter much since investors would likely have shunned them in the first place. On the converse, a mandatory quarterly reporting for a good company slowly becoming not as good will give investors a good heads-up to consider whether to still hold on or sell the stock when they look at the poorer set of financial results on a quarterly basis. In the aforementioned scenarios, I think investors do not want to wait for a half-year then to note that the financial results of their invested stocks have deteriorated significantly and which will lead to a larger sell-down of stocks.
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