Restoring retail investor confidence is key to reviving the stock market

THE poor state of the local stock market has been the subject of much discussion over the past 2-3 years. Declining liquidity, a rising tide of delistings and a dearth of large, good-quality replacements are among the problems the market faces. It is said that the absence of active daily trading married to a relatively small size means there is a very real risk that the Singapore market will fall off the radar of big international money - if it already hasn't.

There are many external forces that have contributed to the weakness - a slowing China, rising US interest rates, soft global earnings, Brexit, the oil price slump, as well as weak commodity prices and worry over the diminishing effectiveness of monetary policy in developed countries to provide the necessary economic stimulus.

But there is also a nagging feeling that the prolonged bear market here is not just because of external factors but also because of deep-seated internal structural problems. One major complaint from stockbrokers is that the authorities had gone overboard in tightening the rules in the aftermath of the Lehman Brothers crisis of 2008, so much so that trading activity has been choked off whilst compliance costs have been raised so high that it is now prohibitively expensive to list or stay listed on the Singapore Exchange (SGX).