Singapore Exchange Improve trading volume in SGX

I was surprised to learn that the trading volume of Hong Kong Stock Exchange (HKSE) is 16 times of the volume in the Singapore Exchange (SGX).

We know that Hong Kong has a bigger population than Singapore and benefits from its closeness to China, but I thought that a difference of 4 times would be justified but not 16 times.

The HKSE is clearly doing very well. By contrast, the SGX is doing badly.

The decline of SGX has been happening for a few years already.

Many friends have told me that they gave up their occupation as a remisier in SGX. The trading volume is low. They cannot cover their operating cost, let alone earn a small income to live on.

What happened to SGX?

I organized a small discussion in my Facebook page last year and received many useful feedback.

The key factors were:

a) There were a few cases of manipulated trading of small penny stocks and China shares that caused losses by small investors. The investors blamed SGX for their poor regulation.

b) The removal of the share price display in teletext discouraged many older investors from trading in SGX. These investors were not technologically savvy and found it difficult to get the prices from the Internet.

The low trading volume in SGX had a spiral effect. Other investors started to move out of SGX to trade in HKSE and other exchanges. I know of many people in Singapore who have moved to trade in HKSE.

The Internet makes it easy for investors to trade in other exchanges.

I suspect that 10% to 20% of the trading volume in HKSE are from Singapore based investors. These trading volume could have come to SGX to increase its volume by 4 times and give a better balance between the 2 exchanges.

What can be done to improve volumes in SGX?

I suggest the following steps:

a) For the MAS and SGX to be more active in protecting small investors from malpractices by listed companies. A more active regulator will build trust among the small investors.

b) For SGX to introduce a way of displaying the prices of the listed shares in the Internet that can be accessed by mobile phones and in the same format as teletext.

The people in charge have to take steps to improve the trading volume of SGX. We cannot be a financial hub with a moribund exchange.

Tan Kin Lian


 

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