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Singapore Law Watch
5 hours ago
- Business
- Singapore Law Watch
Doing away with SGX watch list may help the firms focus more on the long term: market watchers
Doing away with SGX watch list may help the firms focus more on the long term: market watchers Source: Business Times Article Date: 10 Jun 2025 Author: Ranamita Chakraborty As investors become more sophisticated, the onus remains on them to conduct their own due diligence before investing. The proposed removal of Singapore Exchange's (SGX) financial watch list could benefit companies by allowing them to focus on business growth without the burden of public stigma. 'This shift moves away from 'name and shame' and encourages a more constructive environment for corporate recovery and transformation,' Yap Wee Kee, partner of the capital markets group at professional services firm KPMG in Singapore, told The Business Times. Such regulatory measures are expected to steer Singapore more decisively towards a disclosure-based regime. They form part of a broader set of recommendations aimed at revitalising the local market, which were announced by the Monetary Authority of Singapore's (MAS) Equities Market Review Group in February 2025. Established in August last year, the review group comprises representatives from both the private and public sectors. Its objective is to enhance the competitiveness of Singapore's equities market by attracting investor interest, increasing the supply of quality listings, and streamlining the regulatory process for initial public offerings (IPOs). The group is seeking to shift the regulatory focus towards ensuring adequate disclosure of material issues, rather than prescribing how issuers should mitigate risks before listing. In line with this direction, Singapore Exchange Regulation (SGX RegCo) is currently seeking feedback on changes to rules on listing admission and post-listing disclosures. SGX RegCo last month proposed provisionally suspending the half-yearly reviews used to place issuers on the watch list. During this period, companies already on the list will remain listed, regardless of whether they meet the exit criteria. The financial watch list targets mainboard-listed companies with three consecutive years of pre-tax losses and a six-month average market capitalisation below S$40 million. Companies have 36 months to turn it around or face delisting. Some, like Intraco, managed to exit after financial recovery. Others, such as SMI Vantage, were delisted after failing to meet the exit criteria. As at Jun 5, 30 companies remain on the list. Notable names include Trek 2000, known for inventing the thumb drive. Being on the watch list can hurt a company commercially Nigel Toe, a director of business development at local wealth manager ICH Asset Management (ICHAM), told BT that being placed on the watch list can undermine a company's commercial prospects, as it may erode the confidence of clients and business partners. This loss of trust can, in turn, hinder the company's ability to raise capital, reducing its chances of achieving a successful turnaround. Ong Hwee Li, CEO of investment banking firm SAC Capital, said: 'Companies on the watch list often suffer from reduced trading interest as some brokerages may restrict trading for such counters.' As a result, liquidity for these stocks tends to be minimal, given that firms on the watch list face the risk of delisting if they fail to achieve profitability within a specified timeframe. Investor due diligence The need for the watch list appears to be diminishing. Before it was introduced in March 2008 during the global financial crisis, the Singapore market saw several corporate governance lapses. High-profile cases like Chuan Soon Huat, whose directors were arrested over disclosure failures, and Stratech Systems, which faced legal action over a failed software deal, underscored the need for greater oversight. Both were among the first companies placed on SGX's watch list, which sought to improve transparency and flag financially distressed firms. Many believe that investors today are more sophisticated and better equipped to assess the financial health and risk profiles of companies on their own. Investors should exercise the principle of caveat emptor or 'buyer beware' and do their due diligence when investing, said Toe. 'Initially, when you remove a watch list, there will be a bit of apprehension among smaller investors, but they will soon realise that there's no substitute for good due diligence and educating themselves when they invest,' he added. Ong sees value in the watch list, noting that it has served as a catalyst for underperforming firms to restructure, raise capital, or pursue strategic shifts in order to meet exit requirements. He said: 'It will be good if being on the watch list doesn't necessarily lead to a delisting. The watch list could be useful as an investor alert and not a deterrent. 'It is most important that we understand what we are investing in and that the issuer is very transparent with any form of potential sensitive or material information.' While the removal of the watch list may raise concerns about reduced transparency, particularly among less experienced investors, Yap noted that 'the emphasis on timely and quality disclosures can enhance transparency, provided it is well-executed'. With proper disclosures in place, a watch list becomes unnecessary, Toe said, describing its removal as a 'necessary step to promote market dynamism'. Ong similarly argued that the removal of the watch list does not inherently reduce transparency. He said: 'Listed companies will still be required to make timely disclosures, including announcements, if they incur losses for three consecutive years. These disclosures remain available to all investors and continue to provide insight into the company's financial performance.' This approach, Yap added,'affords transparency and accountability to shareholders while giving management the space to execute long-term plans without market pressure'. Source: The Business Times © SPH Media Limited. 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CNA
20-05-2025
- Business
- CNA
CNA938 Rewind - What does the end of the SGX watchlist mean?
CNA938 Rewind Play In a nod to the increasing diversity and complexity of the stock market and investors, the Singapore Exchange Regulation (SGX RegCo) has proposed shifting its regulatory stance towards a more proactive disclosure-based regime. Andrea Heng and Hairianto Diman look at what this new regime entails with Ven Sreenivasan, veteran financial journalist
Business Times
18-05-2025
- Business
- Business Times
MAS, SGX RegCo propose listing rule changes in pursuit of a vibrant, disclosure-based market
[SINGAPORE] Here's how Warren Buffett described the purpose of his annual letter to shareholders of Berkshire Hathaway earlier this year: 'As a public company, we are required to periodically tell you many specific facts and figures,' said the billionaire chairman and chief executive of Berkshire. 'In addition to the mandated data, we believe we owe you additional commentary about what you own and how we think. Our goal is to communicate with you in a manner that we would wish you to use if our positions were reversed – that is, if you were Berkshire's CEO while I and my family were passive investors, trusting you with our savings.' Berkshire has garnered a global investor following by delivering strong returns over a long period of time. Buffett's clear and consistent communication of Berkshire's objectives and its performance – on top of the disclosures it is legally required to make – have also undoubtedly helped build up the market's trust and confidence in the company. This past week, the Monetary Authority of Singapore (MAS) and Singapore Exchange Regulation (SGX RegCo) launched public consultations on a number of proposals to better foster a disclosure-based regime, and make it easier for companies to list in the local market. MAS is proposing to streamline prospectus disclosure requirements for primary listings in order to allow issuers more latitude in providing material information, and to make it possible for issuers seeking secondary listings in Singapore to prepare their prospectuses based on disclosure documents lodged in their home markets, with minimal adaptation. MAS is also proposing to allow issuers more flexibility and scope for engaging investors as they make their way through the initial public offering (IPO) process. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Meanwhile, SGX RegCo is proposing to ease a number of criteria for listing applicants – for instance, by requiring them to simply disclose any material weaknesses of internal controls and steps taken to address them, instead of having to confirm the non-materiality of those weaknesses. It is also proposing to do away with the Financial Watch-list; and adopt a more judicious use of public queries so as not to unnecessarily alarm the market. These proposals are among the slew of recommendations made in February by the MAS-led equities market review group. Other initiatives announced at the time were that MAS will allocate S$5 billion to fund managers investing in the local market. The review group also said that it is studying initiatives to encourage companies to focus on shareholder value, and better enable investors to seek recourse and recompense for losses due to market misconduct. The MAS review group's big vision seems to be that institutional investors will play a key stewardship role in the Singapore market, engaging with companies and pushing them to lift their standards. Combined with more streamlined listing rules, this could create a more conducive environment for promising new listings. Investors need to be alert Are less-prescriptive listing standards really the appropriate remedy for the Singapore market now? Could the proposals just end up facilitating the entry of low-quality issuers? Some market watchers pointed out last week that companies seeking secondary listings in Singapore might be subject to disclosure requirements in their home market that do not sit well with local investors. Notably, DFI Retail Group made headlines in March for not announcing via SGX the sale of its Cold Storage and Giant stores in Singapore for S$125 million. The company – which has a primary listing in London and secondary listings in Bermuda and Singapore – only made a press statement about the deal. DFI's explanation was that the listing rules in the UK did not require it to make a regulatory announcement, as the sale was not price-sensitive and did not constitute a significant transaction. Yet, news reports at the time noted that DFI's share price surged after the market got wind of the sale. The way I see it, investors will have to be alert as Singapore's listing standards shift. IPO prospectuses may be less voluminous in the future, but they should be scrutinised just as carefully. With fewer public queries about unusual trading activity, those market signals could become more potent drivers of sentiment. As for DFI's decision to not announce the sale of its Cold Storage and Giant stores via SGX, my sense is that it probably won't do any lasting damage to its investor following. Much like the rest of the Jardine Matheson group, DFI does a good job of providing useful information about its business strategy and performance. More to the point, DFI appears to be in the midst of a big turnaround. Indeed, the sale of its Cold Storage and Giant stores dovetailed with its broad strategy of pruning its business portfolio while investing in technology and harnessing data to drive its overall profitability. DFI's shares are up 18.2 per cent this year, versus the Straits Times Index's 2.9 per cent gain. Coming conflicts? This brings me to the stewardship role that institutional investors are expected to play. As this column previously asserted, one consequence of the chronic undervaluation of locally-listed stocks is that controlling shareholders may have less incentive to ensure their companies are run for the benefit of minority investors. What is the point of striving for higher earnings if this often does not result in a company's shares trading at a richer valuation? Why not just try to take the company private for less than the book value of its assets? Boards of such companies may do only the bare minimum for minority investors when they push for value unlocking initiatives, or when they baulk at lowball privatisation offers. In theory, a well-resourced institutional investor would be in a better position than a small-time minority shareholder to press a company to reposition its business and unlock value. The question is whether there are enough institutional investors focused on the Singapore market to make a difference. Keep in mind that the boards of companies with dominant shareholders will not easily be persuaded to take the side of minority shareholders in a fight. The institutional investors themselves might not have the stomach for such a conflict, if it potentially threatens their larger business interests. We can only hope that MAS carefully chooses the firms to which it allocates the S$5 billion of funds to reinvigorate the market. In the meantime, investors hunting for opportunities in the local market should perhaps narrow their search to companies that are not only priced attractively and have solid businesses, but that also have the same inclusive attitude towards minority investors as Buffett's Berkshire. Companies win trust not by disclosing what regulators require, but by revealing everything investors should know about what they own.
CNA
18-05-2025
- Business
- CNA
Commentary: After years of playing sheriff, SGX wants to let the market breathe
SINGAPORE: In a nod to the increasing diversity and complexity of the stock market and investors, the Singapore Exchange Regulation (SGX RegCo) has proposed shifting its regulatory stance towards a more proactive disclosure-based regime. SGX RegCo said the new regime - which it is presenting for a month-long public consultation - will focus on 'the materiality of information that needs to be disclosed in a timely and accurate manner'. In doing so, the new approach emphasises a pro-enterprise bias and gives investors information to make their own decisions. In short, the move away from the current prescriptive model of disclosure brings forth the principle of caveat emptor or 'buyer beware' for investors. As SGX RegCo put it, the market can better discriminate in favour of companies with high standards of corporate governance and disclosure. 'The effectiveness of such a market-driven approach rests on a foundation of rules and standards that assure market participants that the information on which they base their decisions is accurate and accessible, and that the market is fair,' said CEO Tan Boon Gin in a statement on Thursday (May 15). This is big. A NEW REGULATORY ERA Ever since the S$8 billion penny stock crash in 2013, regulators have taken a hard line on market malfeasance - both real and perceived. In the weeks leading up to October 2013, Malaysian businessman John Soh Chee Wen and his associates engaged in one of the largest stock manipulations on the Singapore bourse, centred on three stocks: Blumont Group, Asiasons Capital and LionGold Corp. Responding to this, SGX RegCo has taken a very top-down prescriptive approach to market monitoring over the past 12 years, jumping in not just when management, directors or owners strayed from the rules, but even when there were perceived unusual stock price movements. All this has had a chilling effect on the market and effectively killed the 'animal spirits' which is critical to maintain healthy speculative interest which is often the lifeblood of trading activity. As a result, the Singapore market has remained the most moribund in the region as liquidity dried up, price discovery evaporated, valuations hit the floor and new listings disappeared. Meanwhile, delistings have become common. So could the proposed measures announced on Thursday evening change all this? It is too early to say. That said, it is a step in the right direction to rejuvenate this market. But much more needs to be done. THE TOWN SHERIFF While the proposals include a gamut of initiatives, including changes in qualitative and quantitative listing criteria, the most effective initiatives could be the scrapping of the financial 'Watch-List' and the adoption of a more targeted approach in post-listing queries. The much-disliked Watch-List - a 'penitentiary' for companies with multi-year losses and falling market capitalisation - effectively sidelined these corporations. In the process, it killed business confidence and made it near impossible for these companies to raise capital. Meanwhile, the severe and open-ended SGX RegCo queries - often about perceived unusual stock price movements - caused nervousness and alarm in the broader market. Some have likened this approach to a town sheriff in a spaghetti Western who charges into a saloon, guns drawn, causing panic-stricken patrons to dive for cover, when in fact there is only one crook slinking in the far corner of the bar. So how will all this impact the Singapore bourse? In reality, SGX RegCo's proposals dovetail with one of the recommendations announced by the Monetary Authority of Singapore's (MAS) Equities Market Review Group in February. In particular, it plays to the S$5 billion Equity Market Development Programme unveiled by the review group. This scheme envisages fund managers and accredited institutional investors deploying this money into small- and mid-caps which are not on any index. The same fund managers are then expected to monitor the companies into which they invest. In short, some aspects of the market oversight and protection will now move to the realm of the investor, although SGX RegCo will retain backstop surveillance and enforcement functions. WHAT ABOUT INVESTOR PROTECTION? As SGX RegCo put it in its announcement, these adjustments will strike a more 'proportionate balance in facilitating market discipline and achieving investor protection'. While the institutional and accredited investor will indeed be able to handle and monitor the market-based disclosure regime, what about the retail investors? What about the less sophisticated moms-and-pops who have sunk their hard-earned retirement savings into stocks and shares? Their interest will be protected not just by the sophisticated institutional investors, but also SGX RegCo, whose surveillance and enforcement functions remain unchanged. But rather than regularly intervening in the market and creating unnecessary 'noise', it is envisaged that SGX RegCo will take a more targeted approach when it detects irregularities or serious breaches. The interests of the retail investors can also be protected by the Securities Investors Association (Singapore). Since its establishment some two decades ago, SIAS has done a pretty good job as an advocate for retail investors. But there are also other measures in place to protect small investors, such as changes to the Securities and Futures Act in 2017 which saw the strengthening of the governance and enforcement powers of MAS to safeguard the interest of retail investors. If one were to stand back and take an objective look at the initiatives proposed (which are still subject to tweaks) from a risk-reward perspective, the positives outweigh the negatives. This market needs to rekindle the animal spirits. The chilling effect of constant and heavy-handed SGX RegCo queries simply does not allow for this. If implemented, these measures will reduce regulatory friction that impedes price discovery and market efficiency. There will be players who will try to game the system, but the risk of malfeasance of the John Soh variety is small. Much has been learnt and measures have been put in place over the past decade. While the latest proposals may not be perfect in everyone's eyes, they do go some way towards bringing the disclosure regime more in line with more sophisticated markets like New York, London, Tokyo and Hong Kong. One only needs to look back at Tokyo over the past decade, where increased institutional participation coupled with a disclosure-based regime revitalised the market. Hopefully, this will be replicated in Singapore. Taken together with other incentives and liquidity boosting measures still being rolled out by the Review Group, SGX RegCo's proposed light-touch market-driven disclosure regime - which gives investors information to make their own decisions - could be a key catalyst for the revitalisation of the Singapore Exchange.
Business Times
16-05-2025
- Business
- Business Times
Ong Beng Seng's HPL jumps almost 10% in heavy trading; company says unaware of reason for spike
[SINGAPORE] Shares of Hotel Properties Ltd (HPL) jumped almost 10 per cent in active trading on Friday (May 16) morning, prompting queries from Singapore Exchange Regulation (SGX RegCo). At about 11.30 am, the counter was up 9.2 per cent at S$4.72 with over 350,000 shares traded, an unusual volume for the tightly held property and hotel group. But by mid-afternoon, it had given up more than half the day's gains and was trading at S$4.42, up just 10 cents for the day. After news broke that founder and erstwhile managing director Ong Beng Seng was stepping down, there has been talk that new players may be keen on the company. The Business Times columnist Leslie Yee has also argued that with Ong's exit, selling his stake is the logical next step. HPL had announced on Apr 14 that Ong, 79, would be relinquishing his position as managing director to manage a medical condition – multiple myeloma, a form of white blood cell cancer. He also stepped down as a director of the company after not seeking re-election at the company's annual general meeting on Apr 29. On Friday, the local bourse regulator asked the company to explain the stock's 'unusual price movements'. Any previously unannounced materially sensitive information that may explain the trading should be disclosed promptly, SGX RegCo's query stated. The regulator also queried if the company was aware of other possible explanations for the trading activity, while asking HPL to affirm its compliance with listing standards. It added that if appropriate, the company might want to request a trading halt. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Responding to the query on Friday afternoon, HPL said that it was not aware of any unannounced information that might explain the trading. It said it was in compliance with SGX RegCo's listing rules, particularly its obligation to disclose any material information concerning the company. Ong, known for bringing in the Formula 1 night race to Singapore, is embroiled in the high-profile conviction of former transport minister S Iswaran for accepting gifts as a minister and obstructing justice. On Apr 24, the court granted Ong permission to leave Singapore for over two weeks, to allow the businessman time to obtain further reports from his doctors on his medical condition. A spokeperson said he would travel to England, the US and Italy between Apr 28 and May 16 for both medical and work-related purposes. The hotelier and property magnate was named in some charges to which Iswaran pleaded guilty, including abetting a public servant in obtaining gifts, and one charge of obstruction of justice. The Malaysian had previously been scheduled to plead guilty to both charges on Apr 2. The hearing was rescheduled to Apr 25, then again to Jun 10.
