Money Talks Podcast: ‘Radical ideas’ needed to revitalise the Singapore stock market
The Singapore stock market may seem too safe and even “boring”. But boring can be good if you play the long game, says our guest.
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Singapore’s stock market has been in the doldrums, struggling to attract and retain listings. For such a competitive economy, why is the stock market so lacklustre?
Yang Eu Jin, partner and co-head of RHTLaw Asia’s Corporate & Capital Markets Practice, tells us in this week’s Money Talks.
Here's an excerpt from the conversation:
Andrea Heng:
The financial institutions are highly favoured among Singaporean investors when it comes to what's listed on the SGX. Now, some analysts allege that it's the lack of diversity in the SGX that makes it safer than other markets. Seems like a bit of a contradiction here. If it's safe and it's stable, how does the lack of diversity actually hinder us more than help us?
Yang Eu Jin:
We're not a very diverse market. Certainly in terms of the value of the stocks, we have about 600 over listed companies. Of course, they come from a variety of sectors, but many of them are very small. So the big boys (are) overrepresented in terms of the financial sector. Yes, we are a safe market, and we are a stable market. (If you) compare us to virtually any other market out there, we are a lot more stable.
Andrea:
But are we boring?
Eu Jin:
Yes we are, but that's not a bad thing. There is an investment firm whose motto is "Be boring, make money".
Because at the end of the day, you don't want a lot of drama, do you? When you're putting your money (into the market), you just want it to give you steady returns. In that sense, I think being safe is not a bad thing.
... If these certain stocks are doing well, you can put your money there. But at the same time I think there are different investors out there with different interests, and they themselves may have certain expertise. And one of the mottos you should always have is invest in the sector that you are familiar with.
So the thing is that if there's not much to choose from, or those that are listed are not doing well, even though you're from that sector and you know the sector well ... in fact in a situation like that, you look at the stocks, and then you say, no, no, these are not worth investing in.
So I think greater diversity will also allow a greater diversity of investors to come in and invest in the stock market, so it would be a good thing. I guess we need to all try and encourage that.
