I APPLAUD the move by the Singapore Exchange (SGX) to reduce lot sizes from 1,000 shares to 100 shares, thereby allowing greater accessibility for retail investors ("Daily retail trades on SGX jump 82% after debut of smaller board lots"; ST Online, last Thursday).
This decision is starting to bear fruit, with the trading value in January at $25 billion, an increase of 12 per cent year on year. But this figure is still asharp decline from the US$33.8 billion (S$45.7 billion) recorded in October 2010.
Singapore's bid to become a global financial hub cannot be complete without an active and thriving stock market. This should be an area of concern for the SGX and the Monetary Authority of Singapore.
There have been too many products and measures introduced by SGX that are perplexing and incomprehensible to the layman.
Products such as the American Depository Receipts, extended settlement contracts and government bond listings should be seen as supplements to the stock market and should not serve to draw cash away from the mainboard.
SGX should seek to eventually reduce the lot size of stocks from 100 shares to one in order to further boost stock market volumes.
Also, instead of introducing more products that may not be understood by the layperson, SGX should focus on holding more talks to introduce the attractiveness of traditional stocks on the mainboard and Catalist markets to attract more young investors.
The market possesses many quality stocks with sound fundamentals. What we need to do is boost the stock market's attractiveness and promote greater awareness.
Matthew Kwan Kai En
This article was first published on Feb 09, 2015.
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