MAS review group disappoints, then delivers

THE acid test for the first set of measures to revitalise the Singapore market could be whether the local bourse operator’s share price rebounds this week.

The Singapore Exchange (SGX) has been on a roller-coaster ride over the past month. Its shares shot up following a strong earnings report on Feb 6, but subsequently fell back on concerns about the equities market review group formed by the Monetary Authority of Singapore (MAS).

Specifically, the worry was that the review group would deliver little more than tax incentives to draw listing candidates and investors to the local market.

SGX closed on Friday (Feb 21) at S$12.80, down 8.5 per cent from its recent closing peak of S$13.99 on Feb 7. Even after taking account of the shares trading ex-dividend on Feb 13 for an interim payout of S$0.09, investors would still have suffered an effective pullback of 7.9 per cent.

Yet, the measures that the review group announced after the market closed on Friday were not a disappointment, in my view. In particular, MAS said that it will farm out S$5 billion to fund managers investing in Singapore stocks. The fund managers must have a good track record, venture beyond index component stocks, and be willing to expand their operations in Singapore.