Retail trading less speculative today: SGX executive

Retail participation in the Singapore market has fallen in the last 18 months, but it is also less speculative today, a senior executive at the Singapore Exchange (SGX) suggested on Friday.

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Guanyu said…
Retail trading less speculative today: SGX executive

Jamie Lee
09 May 2015

Retail participation in the Singapore market has fallen in the last 18 months, but it is also less speculative today, a senior executive at the Singapore Exchange (SGX) suggested on Friday.

Speaking at a Bank of Singapore conference, SGX's head of sales and clients Chew Sutat said daily retail participation is now a "tad lower" at 35-40 per cent over the last 18 months, compared to a year before.

"You saw in the past, a narrow group trading a lot - all the way until October 2013," he said, referring to the penny-stock crash some two years ago that involved Asiasons, Blumont and LionGold.

But this also comes as Central Depository (CDP) accounts have grown by about 70,000 last year, with more than half set up by young investors.

And when SGX reduced the board lot size from 1,000 shares to 100 shares at the start of this year, it saw a significant increase in the number of Straits Times Index (STI) stocks being traded, said Mr Chew.

"You see the breadth of the market growing, and that's what we're particularly interested in and concerned about, because as a whole, Singaporeans are under-invested in equities," he told The Business Times, citing a report from two years ago that said some S$80 billion in qualifying CPF savings remain uninvested.

He added that the improvement from the reduction in the lot size has been "more encouraging" than expected, as this helped to narrow the bid-offer spreads for the top 70 to 90 stocks, together with the existing support from market makers.

There is also indirect retail participation in the Singapore market that has grown in tandem with the expansion of the private banking industry. "That activity is seen (by) us as institutional flow," said Mr Chew.

He noted that the STI's annualised 10-year return - on a Singapore-dollar basis - of 8.7 per cent as at the first quarter of this year cannot be sniffed at, especially given the market's low volatility.

"This is a market that rewards you for staying in the market."

This is also an attractive market given that dividend companies in Singapore and the region are not like mature firms in the West, said Carmen Lee, head of research at OCBC Investment Research. Those in Asia are still in growth mode, but are also committed to paying dividends to shareholders, she told BT.

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