One takeaway from Hyflux saga: Investors must be educated on risks

IN a post-Lehman Brothers world and a disclosure-based market that relies mainly on caveat emptor or "buyer beware", the importance of investor education cannot be overstated.

Investors who are knowledgeable and well-versed in how markets operate and the features of offered products would be much better able to gauge risks versus returns; conversely, lack of knowledge and understanding could well result in people investing in products not suited to their individual risk profiles.

Nowhere is this more apparent than in the case of Hyflux Ltd, whose spectacular collapse must surely rank among the local market's greatest shocks given the company's once-lofty status in the eyes of local investors as a premier water treatment firm. Many questions are now being asked of what went wrong; how it is that a company that was profitable just a few years ago can now be virtually insolvent, whether the management had properly discharged its fiduciary duties and why there were no warning signs earlier.