The Singapore Exchange's assumption that the opening of 71,043 new Central Depository (CDP) accounts in the past year translates into a corresponding increase in trading activity is not a reasonable one ("SGX cites rise in retail activity to rebut petition"; last Friday).
It said that more than half of the 1.7 million accounts at CDP have share investments. The corollary is that the rest do not.
It would be interesting to learn how many of these invested in companies other than Singtel.
The SGX also asserts that the number of daily retail transactions has skyrocketed since the 100-unit board lots were introduced. This optimism appears unwarranted.
True, two billion shares worth $1.1 billion were traded on Jan 21 - shortly after rules allowing smaller minimum board lot sizes kicked off. However, since then, trading has been desultory at best. Just last Thursday, trading volume dipped below the one billion benchmark.
The reason for the depletion in the ranks of remisiers is that stockbroking is no longer seen to be as lucrative and glamorous as in the past. Large numbers who climbed aboard with the feeling that fortunes could be made exited after the highly touted 100-unit board lot failed to attract the expected custom.
The figures show that small investors who had been left out in the cold while the red carpet was rolled out for the big boys now feel disinclined to re-enter the ring.
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This article was first published on February 10, 2015.
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