MTP is meant to boost market quality, curb excessive speculation

WE refer to the recent commentary by R Sivanithy (BT, Nov 6) and various letters on the Singapore Exchange's (SGX) S$0.20 minimum trading price (MTP) initiative.

MTP was introduced to improve the quality of the stock market and reduce the risk of excessive speculation. Share consolidation is one way for companies to comply with the requirement. Such an exercise will have no impact on the proportion of a company's shares held by a shareholder. The fundamentals of a company are not impacted by share consolidation. Therefore, both before and after consolidation, a shareholder's entitlement to the company will remain the same.

As Mr Sivanithy pointed out, one of the reasons why post-consolidated shares have weakened are poor fundamentals. After all, the financial fundamentals of a company remain the key driver of share price performance over the long term.