I AM surprised by the Singapore Exchange's (SGX) $250 million investment to create the world's fastest trading engine, and wonder if this is what our stock market needs.
I have been involved in stockbroking for the past 17 years and have not seen the Singapore stock market trading volumes languishing so badly.
One does not hear many phones ringing in the dealing rooms, even at times when the markets look buoyant. Most of the trading volumes are perceived to be created by programme trading.
With so many third-rate companies from China being brought in, many retail and institutional investors have lost quite a bit of money. Some Chinese companies may be good investments, but it is difficult for investors to distinguish the good ones from the bad, largely because of unreliable financial data.
What the market needs is to have more good-quality blue-chip companies and world-class firms listed here. We can start by looking at home-grown organisations such as PSA and PUB, as well as companies in the Temasek stable.
One factor behind SGX's recent failed ASX deal could be the perception that it was a takeover rather than a merger.
The deal could have gone through if it was strongly emphasised that it was a merger between two equals, thereby minimising nationalistic sentiments.
The industry was looking forward to the merger as it would have provided the necessary depth to the Singapore market.
SGX has introduced new products such as extended settlement contracts and American Depository Receipts. So far, the market response to these have been lukewarm.
As for doing away with the lunch break, it would have been wiser to follow the Hong Kong Stock Exchange's policy of a gradual withdrawal rather than removing it at one go.
S. Nallakaruppan
May 18 2011 - ST Forum
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