More concerted efforts needed to help retail investors make informed decisions

I REFER to the editorial “The struggle for coverage of smaller companies” in The Business Times on Oct 5.

The editorial detailed initiatives that the Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX) have taken to boost research coverage of smaller SGX-listed firms. It then suggested that a lasting solution has proven elusive.

It is a positive sign that there is now greater recognition of how better research coverage can improve investor knowledge and improve trading liquidity. In today’s uncertain economic environment, sound investment analysis can also help retail investors make informed decisions and achieve their financial goals.

Encouragingly, individual investors have shown a keen interest to empower themselves to invest wisely. As a MAS-licensed investment advisory platform, Beansprout sees evidence of this in the increasing number of retail investors seeking investment insights and taking part in financial literacy programmes on our platform.

The Grant for Equity Market Singapore (Gems) scheme has played a role in developing local equity research talent. As a beneficiary of the Gems Research Talent Development grant, Beansprout has been able to hire research talent and help nurture a pipeline of analysts.

Such talent initiatives can enhance the long-term competitive edge of Singapore as a financial hub, in addition to helping with the research coverage of smaller firms.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

However, equity trading volumes remain weak, while we continue to see a spate of delistings. More needs to be done to spur public market activity in Singapore.

Private companies could consider taking the lead in addressing market gaps, and can tap the Gems Initiative Grant for this. Unfortunately, only one project out of 15 draft applications has been approved since the grant was launched in January 2019, as shared by Senior Minister Tharman Shanmugaratnam earlier this year.

To extend equity research services to more retail investors, the community can also explore innovative methods of partnership. For instance, the Securities Investors Association of Singapore is independently appointing a research firm to provide research on SPAC (special purpose acquisition company) mergers to ensure that retail investors have the necessary guidance in evaluating SPAC transactions.

Re-instilling confidence in the Singapore equity market is not as difficult as the editorial suggests. What it needs is a more concerted effort by stakeholders to recognise how high-quality investment research can help individual investors make better financial decisions.

Gerald Wong,

chief executive officer,

Beansprout