Charger Award — Rejuvenating The Market

SINGAPORE’S stock market isn’t the land of riches and opportunities it once was. Can commentators at the inaugural Charger Award (www.chargeraward.com) organised by STORM.SG find ways to give the market a much-needed shot in the arm?

We pick out the highlights from Part Two of the discussions that focused on the issues in Singapore’s stock market.

You can read Part One HERE.

It’s a desert and not a jungle out there!

Independent Director and Investor Chong Huai Seng likens the stock market to the ecosystem of a tropical jungle. But he declares that the local market is no longer a healthy and thriving jungle.

“For a healthy jungle to thrive you need a good ecosystem with big tall trees that reach upwards, small weeds that survive on the damp ground of the forest, and everything in between,” Chong explains

In decades past, Chong remembers the markets of the region being intrinsically linked and populated by large multinational companies, smaller regional and local outfits, and emerging new comers looking to climb up the ladder being supported by an adventurous and ambitious group of investors.

This dynamic ecosystem has since become sterilised, he worryingly points out. He feels that the increasing regulation, prohibitive expenses of listing, and the often disappointing valuations offered by the market have all contributed to this “vicious cycle”.

He suggests education — of prospective investors by industry professionals like analysts and brokers — could be the way to invigorate more positive activity in the ecosystem. Alternatively, a Catalist Fund, even of a conservative $30million could also spur the flow of interest and capital into the market.

Is Singapore still an attractive place to IPO?

It’s a big resounding NO, according to Kamal Samuel, Managing Director, Financial PR.

He says that if industry voices are to be believed, Singapore’s stock market has already lost much of its lustre. Bigger markets such as New York, London, and the like are far more attractive for decent sized company looking to launch into the stock market with an initial public offering (IPO).

Local investors are also too cautious to take a chance on newcomers. They are easily dissuaded by losses on the balance sheet and are looking for immediate returns from a healthy price to earnings ratio.

They struggle to see potential that may pay dividends in the future. Samuel uses cloud computing company salesforce.com as an example — it reported no earnings for a long time but their valuations today are sky high!

Markets in New York have proven to be far more receptive, with eager investors, for companies like that.

Malaysia’s “Booming” Property Market

The upcoming Kuala Lumpur to Singapore high-speed rail project has prompted a flurry of activity in the Malaysian property market. But it might not be all it’s cracked up to be warns Ku Swee Yong, CEO, International Property Advisor.

The introduction of Malaysia’s North-South Expressway in the mid-’90s already provides a case study for possible effects of the high-sped rail according to Ku.

Many small towns along the route to Johor Bahru, Penang, Malacca, and Kuala Lumpur flourished as rest stops for both locals and tourist during the ’70s and ’80s, but they have since regressed or even disappeared once the expressway became the preferred route.

“Infrastructure can bypass all of us, as it has done with these towns,” he explains.

The arrival of the high-speed rail might see a similar situation — while the terminal stations in Singapore and KL may benefit, it will probably be at the expense of towns and cities in the middle.

While many property agents suggest investing in property along the rail link, the best place for your investment bet might be in KL and Singapore. At the very least, this conflicting investment opportunity is worth deeper study.

Check out the full highlights in the video.

Discussions at the Charger Award features opinions and views from: Independent Director and Investor Chong Huai Seng; Clemen Chiang Ph.D, CEO Spiking; Kamal Samuel, Managing Director, Financial PR; Prof. Kirpal Singh, Director, Wee Kim Wee Centre, Singapore Management University; and CEO of International Property Advisor Ku Swee Yong.

NOTE: This is not a recommendation to buy or sell shares in the companies. You are advised to do your own due diligence.