Challenges for new SGX CEO to boldly tackle

MUCH is expected of new Singapore Exchange CEO Loh Boon Chye, as the wish-list published in the media reveals. Various concerns raised have been largely about the market: the challenge of increasing participation by investors, low trading volumes, lack of good listings, and improving market valuation. It's not an easy job, given the many issues pending resolution and competing interests of several stakeholders to be balanced. Many are expecting Mr Loh to provide solutions to the current problems.

How can SGX increase investor participation? The Exchange needs to urgently address liquidity issues. Internally, there is S$56 billion lying in fixed deposits earning returns that aren't even enough to cover inflation. Depositors are not growing their money. They need to know that they have to invest. Much has been said about this and yet there is great reluctance by Singapore citizens to enter the stock market.

Is there a lack of appropriate products suitable for Singapore's risk-averse investors? Not really. The recent announcement by the Monetary Authority of Singapore (MAS) to introduce a savings bond is a good start. But that alone is insufficient. It is largely ignorance about investment products and how to access them. There is a lack of skills in managing risks in the products and also lack of advisory services to help retail investors make informed decisions. They are generally left to themselves. Although SGX has introduced several initiatives to educate the public through online and physical programmes like roadshows, more must be done.