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
02 September 2014
The Singapore penny-stock crash of October last year was a painful affair that generated widespread discussion among regulators, stockbrokers and members of the public on what went wrong, how it could have been handled better and how to prevent a recurrence.
The consensus was that a huge speculative bubble had been allowed to inflate over a long period in low-priced, low-investment grade stocks with disastrous consequences once it burst. So the view which emerged was that stricter measures were needed to ensure better quality in the market and to rein in excessive speculation (and possibly manipulation).
New measures were then framed such as disclosure of short-selling positions, a minimum trading price, smaller board lots and payment of collateral for purchases. All well and good except that interest in local stocks has not returned as hoped; instead, volume has dried up and retail presence is said to have all but disappeared.
Meanwhile, there has been a huge penny-stock explosion on Bursa Malaysia over the past three months, where volume has ballooned from 26 billion units in June to 34 billion in July and 58 billion in August.
On Aug 20 alone, volume traded on the Malaysian bourse was a staggering 7.7 billion shares, of which 65 per cent were those of companies with a market capitalisation of RM150-300 million (S$59.4-118.9 million). The value traded that day was RM3.3 billion, which means that the average unit traded was about 43 sen - well inside penny-stock territory.
Moreover, news reports are that every day there are gains of 5 per cent or more in heavy trading, whilst in a handful of cases, prices have doubled in a few weeks.
Needless to say, retail brokers in Malaysia have reported a surge of interest among their customers and in July about half the month’s unit volume was generated by retail players.
What has brought small investors rushing back into the Malaysian market whilst efforts in Singapore to woo retail investors have come to naught?
When asked about this, the reply from market observers is perhaps not surprising - tighter rules announced recently have meant that speculators, day traders and other market operators have shifted their focus to Malaysia, and the resultant rise in liquidity has attracted greater retail participation.
How long this will last is anybody’s guess - some brokers in Malaysia are already imposing trading curbs - but as it stands now, it looks like moves here to raise the quality of local listings, raise liquidity, improve risk management and deter speculation (in total, measures to strengthen the market) have instead pushed players away from Singapore stocks.
If this explanation is accurate - and we have no reason to doubt it - then there are implications for everyone connected to the market here, the most obvious being whether local regulators have gone too far in reacting to the penny-stock crash.
Some observers say that many retail investors, while openly professing a desire for reform and a preference for less speculation and volatility, privately admit a preference for less regulation and not more and also yearn for a market where stocks can double in a few days, or rise tenfold in a month without fundamentals.
Our view is that once the overhaul process has started, there should be no turning back. The way forward has to be via better quality companies, less speculation and greater disclosure. The rules should encourage prudent investment whilst allowing some leeway for speculative punting, though the latter has to be closely monitored and kept to manageable levels.
But you’d have to wonder - is this really what the market wants?