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Part of Market growth potential is being discussed, noting key home markets and liquidity flows through Singapore, involving entities like Maybank, Indonesia, and Malaysia.

How could Koh Boon Hwee's commentary on local stock market liquidity affect Loh Boon Chye?

Possible What happens if… A possibility worth considering, not a forecast.

Loh Boon Chye may face increased pressure to address SGX's liquidity challenges Koh Boon Hwee, the SGX Chairman, commented that the exchange does not create liquidity or demand and supply for small and mid-caps, suggesting the bourse needs to do more to lift overall secondary trading liquidity. As CEO, Loh Boon Chye is responsible for the exchange's operations and market development, meaning he would be central to responding to these calls for change, such as removing clearing and trading fees or encouraging proprietary trading.

Reported by 1 independent outlet Written Oct 17
Effect
Mild negative
How direct
Brind's reasoning
When
Within weeks
The story
Gone quiet

How it reaches Loh Boon Chye

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The facts so far

As reported. Each one links to where it comes from.

  • Koh Boon Hwee stated that small- and medium-sized enterprises should not depend on SGX to boost their valuations, as the bourse does not create liquidity nor demand and supply.channelnewsasia.com
  • Many small and mid-caps, especially those with market capitalisation of below S$200 million, remain rangebound and thinly traded.channelnewsasia.com
  • Koh Boon Hwee suggested one possibility is to remove SGX clearing and trading fees to reduce friction costs for proprietary traders and market makers.channelnewsasia.com

Why it matters

The health of the local stock market is crucial for Singapore's financial ecosystem, particularly for SMEs seeking capital. Poor liquidity prevents proper price discovery, making it difficult for these companies to use their shares for raising capital or engaging in M&A activity. The commentary highlights a systemic issue where market outperformance is limited to large-cap financials, masking the struggles of smaller firms.

This discussion is part of a broader effort to revitalize the market, which has seen measures like the S$6.5 billion Equity Market Development Programme (EQDP). However, the commentary suggests that while the EQDP has created primary demand, it has not yet meaningfully improved secondary trading liquidity on SGX.

What we don't know yet

  • Will SGX implement any of the suggested changes, such as removing trading fees or encouraging proprietary trading?
  • How will the SGX respond to the criticism regarding the market's inability to support small and mid-cap valuations?

What would change this answer

SGX announces a review of its clearing and trading fees for SMEsThis would signal a concrete response to the pressure, potentially easing the immediate strategic burden on Loh Boon Chye.
The Monetary Authority of Singapore issues a report detailing the effectiveness of the EQDP on secondary tradingThis would provide context on the market's current state, potentially mitigating the severity of the criticism directed at the SGX.

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The full eventKoh Boon Hwee comments on liquidity challenges for small-cap stocks in Singapore Everything aboutLoh Boon Chye

Brind's analysis is written by AI from the reporting linked above and can be wrong. This explainer is a possibility worth considering, not a forecast: steps marked as Brind's reasoning are not stated in the reporting. It is not investment advice; do your own research.