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1985: Stock exchange standstill and recession

Singapore stocks face one of their toughest years with the Pan-El crisis, negative growth and a turbulent take-off for SIA.


The collapse of Pan-Electric Industries is arguably one of the most important events in the history of the Singapore stock market.

The revelation of distressed fundamentals at Pan-El led to a runaway chain of worthless forward contracts that hit every broker in town, sparking fears that the stockbroking industry would be wiped out. Regulators in Singapore and Malaysia took the unprecedented step of shutting down their stock markets as they tried to figure out how to contain the damage.

In Singapore, the major banks created an emergency fund to help support the brokers. Regulators overhauled the securities industry, giving the Monetary Authority of Singapore greater supervisory powers over the stock exchange and creating the Securities Industry Act. Pan-El as a stock may be no more, but the legacy of its infamous demise lies at the core of Singapore’s market structure today.

Pan-El did not collapse in a vacuum. Its downfall came amid Singapore’s first post-independence recession, an economic shock for a nation that had enjoyed 20 years of growth.

Top policymakers would later describe the 1985 recession as “self-inflicted, pointing to large wage increases that had been recommended by the National Wages Council in the early 1980s. Those wage hikes were aimed at uplifting Singapore’s economy toward higher- skilled work, but may have dealt a blow to the country’s competitiveness instead, the arguments went.

It was little surprise that Singapore Airlines’ widely anticipated initial public offering that year quickly met with turbulence upon listing.

The glamour stock put up a disappointing maiden performance and ended the day with the dubious honour of being the first newcomer in years to open trading below its issue price. It was the only company to be admitted to the Stock Exchange of Singapore that year.

The Business Times has been there to report and analyse the most significant news since 1976. Every week, this feature will showcase excerpts from the biggest stories for each year that the paper has been in operation. The full text of all the stories can be found online at

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