TWO former senior employees of UOB Kay Hian Private Limited (UOBKH) were charged on Wednesday for allegedly lying to the Monetary Authority of Singapore (MAS) in relation to reports on a then Catalist aspirant. Lan Kang Ming, 38, and Wee Toon Lee, 34, each face three charges of providing MAS with false information in October 2018 in relation to due diligence reports on an unidentified company applying to list on the Catalist board of the Singapore Exchange. MAS said in a media statement on Wednesday that it was performing an onsite inspection of UOBKH between June and August 2018, to assess the latter's controls, policies and procedures in relation to its role as an issue manager for Initial Public Offering (IPOs). During the examination, Lan and Wee were said to have provided different versions of a due diligence report relating to background checks on a company applying to be listed on the Catalist board of the Singapore Exchange. UOBKH had acted as the issue manager
Comments
R Sivanithy
14 May 2014
It’s no secret that conditions in the local stock market are poor and have been that way for many months. Liquidity is low, retail brokers are disillusioned with their dwindling income and deteriorating working conditions and the retail public appears to have abandoned the market in droves.
In a bid to shore up confidence and attract investors back into local equities, a consultation paper was recently issued on measures to strengthen the market.
It might be that the proposals and various suggestions from the public, if adopted, could spark some life in a moribund Singapore market. But one can’t shrug off the nagging feeling that this is simply papering over the cracks, short-term stopgaps that can’t hide the fundamental problem afflicting the Singapore stock market: it lacks what marketeers label a Unique Selling Point (USP).
In its USP definition, online encyclopaedia Wikipedia quotes Theodore Levitt, a professor at Harvard Business School who suggested that “differentiation is one of the most important strategic and tactical activities in which companies must constantly engage”.
Wikipedia adds “today the term USP refers to any aspect of an object that differentiates it from similar objects” and suggests three pointers - the USP must make a concrete proposition to the consumer - not just words, product puffery, or show-window advertising; it must be something the competition cannot or does not offer; and it must be strong enough to move the masses, i.e., attract new customers.
Hong Kong, by virtue of geographic proximity, can claim its USP to be a developed market gateway to the vast China hinterland. The Australian Stock Exchange describes itself as the first major market to open every day (it is also known as a hub for mining companies to list); Bursa Malaysia positions itself as a prime marketplace for Islamic finance products in the region.
What can the Singapore stock market offer that sets it apart from all others? Sadly, very little.
In the 1990s, Singapore’s USP was arguably two-fold - high-tech, low-cost electronics companies/contract manufacturers, and Clob International.
The former included stellar names such as NatSteel Electronics, NatSteel Broadway and JIT, while Clob sold the idea that investors could trade about 200 Malaysian stocks over-the-counter in a market that quoted prices in Singapore dollars and was backed by a formidable broking and banking infrastructure.
Unfortunately as marketeers would know, USPs are always under threat, usually eroded by competitive and/or envious interests. The success of both USPs ultimately led to their disappearance - the best contract manufacturers were bought out and taken private mainly by foreign interests while others eventually moved to lower-cost China.
After existing for eight years, Clob was declared an illegal market by the Malaysian authorities and was forced to close in 1998.
Attempts since then to develop a new USP have not succeeded, at least not on the equities front. The influx of China stocks, or S-chips, has turned out to be a painfully forgettable experience.
Being the only Asian exchange with full-day trading has not made any discernible difference and although Singapore Exchange (SGX) has developed strong derivatives, clearing and post-trade businesses which have compensated for the dwindling contribution from the equities side, it knows full well the importance of having a thriving stock market.
Note that this is not an SGX-centric issue, but one that affects the whole financial community - brokers, bankers, lawyers, the central bank, auditors and so on.
All ought to ask themselves: What should be an appropriate USP for the Singapore stock market?
Should it be strong regulation? No - click on the home pages of any exchange and all advertise right upfront how serious they take governance and regulation, so there’s nothing unique there. Moreover, the idea of a profit-driven exchange laden with conflicts of interests has never sat well with a sceptical market and cannot reasonably qualify as a USP.
How about being a nursery for promising enterprises, which is what all exchanges should be? This sounds good in theory but one look at the hundreds of penny stocks languishing here with no volume or research coverage would be enough to deter many smaller firms from seeking a listing.
What’s needed is a fundamental rethink of everything associated with the market, especially those ideas imported from supposedly developed markets over the past two decades which don’t appear to be as progressive or useful as claimed.
If this is ever to be done, there should be a willingness to: (a) reverse decisions taken earlier if those decisions have led to worthless outcomes, and (b) take the stance that it’s more important to cater to what investors need rather than what companies want.
Examples of questions to be asked are: Should the regulator be listed? Why should companies - especially loss-making ones, or the smaller ones on Catalist - be allowed to place out as many shares as they are to sympathetic parties when going public?
If the sponsor system isn’t working, why not abandon it and forget about all allowing loss-making companies with no track record to approach the public for money? Do we really want high-frequency trading?
There are clearly no easy answers to these and dozens of other similar questions but in the quest for a USP, there should be no “sacred cows” that are untouchable, no issues that should be dismissed lightly.
The faster this is done the better, otherwise the local market, which doesn’t have a USP, could be in danger of descending into mediocrity - if it hasn’t already.