Singapore stocks: Once bitten, twice shy

[weijian]

SGX to launch index that tracks listcos beyond STI: Chee Hong Tat

[SINGAPORE] The Singapore Exchange (SGX) will be launching an index that tracks listed companies that are not constituents of the Straits Times Index (STI), as part of efforts to showcase its broader equity market, said Monetary Authority of Singapore (MAS) deputy chairman Chee Hong Tat on Friday (Sep 12).

My enthusiasm was stirred up when the announcement was made. But it quickly died down after this new "small/med cap index" was revealed. At least 50% of the weightage is made of of REITs/Trusts. Out of the top10 constituents (making up ~47% of the weightage), 8 of them are REITs/Trusts with YZJFH and ComfortDelgro completing the list. Therefore, this is more like a REIT index + little bit of everything else.

That said, this is probably also symbolic of Spore as a whole, isn't it? A place where public homes change hands for million dollars (not an outlier anymore although they are still generally constrain to choicer locations/higher floors/bigger sizes).

SGX rolls out new indices to broaden visibility of listed companies beyond STI


Complementing existing benchmarks, the iEdge Singapore Next 50 Indices are designed to raise the visibility of mid-cap companies and broaden investor participation in this increasingly active segment of the market.

Luke Lim, managing director at Phillip Securities and Securities Association of Singapore (SAS) chairman, described the new benchmarks as a bridge for investors. It helps them “move from the familiarity of established benchmarks to growing confidence in Singapore’s mid-cap companies”, he told The Business Times.

Echoing this sentiment, David Gerald, the president of Securities Investors Association (Singapore), or Sias, noted that this move sets a precedent for other index providers to follow and encourages the development of new indices that spotlight different tiers of the market.

“The move also encourages companies to do more to unlock shareholder value as their viability would be recognised,” he said.

https://www.businesstimes.com.sg/compani...beyond-sti

Full list of constituents: https://api2.sgx.com/sites/default/files...tsheet.pdf

[CY09]

Hi Weijian,

I do agree with you. The large companies in Singapore are now dotted with Trust and REITs. Even Centurion, Yangzijiang Financial, Boustead and Wee hur are boosted by either they spinning off their trust/REITs or property accomodation stories. Post spin off, it is likely more Trust/REITs will be added to this next 50 basket.

If you notice, Guocoland and Ho Bee despite being 2 and 1.5 billion in market cap is not added in the next 50. Why is this so? Because they have little trading volume + the developers has been forthcoming in saying that REIT is not in their cards yet.

The developers are geared 50-70% leveragesd. The exchange on a whole are dotted with real estate trusts and partly due to Singapore being the rare few countries which allows an external managed REIT manager

[weijian]

The developers are geared 50-70% leveragesd. The exchange on a whole are dotted with real estate trusts and partly due to Singapore being the rare few countries which allows an external managed REIT manager

Hi CY09,

Your bolded portion seems to suggest that an external REIT manager is not allowed in most other countries. That is definitely not true from a legal perspective. Personally, I think internal/external REIT manager has its pros/cons and therefore plenty of nuances based on the geography's regulations, investor preferences and the availability of expertise.

It is a fact that REITs in Western markets (US/Canada) mainly uses an internal manager model because that's how it has evolved based on investor preferences, regulation preferences etc. But the internal manager model been the default isn't because an external manager is not legally allowed in these markets.

On the contrary, many countries eg. Australia and Japan actually legally require an external REIT manager. Of course, some of them go around this problem by stapling the external REIT manager with the REIT itself (like how many S-REITs are stapled securities with a REIT + Trust, hence allowing more flexibility), making the separate REIT manager effectively an internalized entity.

[weijian]

I have read some stats on how pharma (or biopharma since pharma science has since advanced to using biotech) works - (1) Slightly less than 1 in 10 of drugs that passes pre clinical trials get final FDA approval. (2) In the 1950s, it costs ~50mil to get a drug approved and that is adjusted for inflation. Since 2000s, it is 2.3bil.

So small biopharma firms with promising drug lines are almost guaranteed to be acquired by Big Pharma. And there is more venture capital investing than private equity investing involved - If only 1 out of 10 firms make it, then having just a few biopharma firms listed means that one's effective odds of failure is 100%, isn't it?

In 2001, I was still in school. But I believe on the back of AFC97, Dotcom crash 2000 and then 911, no product would have sold regardless of how much merit it has. But it make sense to keep throwing stuff on the wall and see what sticks. Incorporating failure is about trying many things, keep the failures small (most of them will fail) and doubling down on those that succeed.

The biopharma scene in Singapore is vibrant, but few make it to SGX

SGX-listed biopharma players also lack a strong track record. While there may be the rare exception, Azure Capital’s Wong said: “I struggle to think of one that made money.”

iX Biopharma, listed in 2015, has seen its market price decline over 95 per cent from its listing price; Biolidics, listed in 2018, now trades at a price that reflects a drop of more than 90 per cent from its IPO level.

In 2001, the first attempt to launch a real estate investment trust (Reit) listing on the SGX failed because of insufficient investor demand, he recalled. “So we started to educate investors,” he said, adding: “From 2004, 2005, more and more Reits started to sprout up, and then we later became the Reit capital of Asia.”

https://www.businesstimes.com.sg/singapo...ake-it-sgx

[Wildreamz]

I follow Martin Shkreli closely on YouTube and X, and he frequently posts his new picks (shorts or longs). His hit rate and slugging ratio are both high — and you can see it play out in real time (recent case being Uniqure NV (QURE)). His reasoning is usually sound and grounded in publicly available info, often PubMed articles.

Yes, the chance of failure is extremely high if you just invest blindly. But if you actually do the work — digging into trial data, drug mechanisms, and the literature — some people really can tilt the odds in their favor. At the end of the day, that’s not much different from any other form of investing.

[EnSabahNur]

I follow Martin Shkreli closely on YouTube and X, and he frequently posts his new picks (shorts or longs). His hit rate and slugging ratio are both high — and you can see it play out in real time (recent case being Uniqure NV (QURE)).

Do you coat-tail on his trades? 
How do you do it effectively, if you are not the one digging into the same data as him? In other words, how do you manage the risk of duds?

[Wildreamz]

I follow Martin Shkreli closely on YouTube and X, and he frequently posts his new picks (shorts or longs). His hit rate and slugging ratio are both high — and you can see it play out in real time (recent case being Uniqure NV (QURE)).

Do you coat-tail on his trades? 
How do you do it effectively, if you are not the one digging into the same data as him? In other words, how do you manage the risk of duds?

I do not coat-tail his trades, just take it as data points to understand pharmaceutical investing. I do have an existing position (Him and Hers) that he eventually became bullish about. It was interesting to hear his take at that time.

[weijian]

Incentives lead to increase in quantity of reports. How to verify the quality of the reports?

https://www.corporate-rebels.com/blog/leaders-rules

Some examples of reports that are funded by MAS:

https://api2.sgx.com/sites/default/files...mended.pdf

https://api2.sgx.com/sites/default/files...ted%29.pdf

Just like how Amazon pioneered product reviews, maybe SGX should pioneer some sort of analyst report reviews!  (well, maybe it already exist somewhere...)

[weijian]

I always look forward to Tan Boon Gin's speeches. This time around, he points out that market discipline imposed by institutional investors have been missing on the local bourse. In recent times, the only market disciplinary move by institutional capital that was successful came at Sabana REIT and it was because 2 SSHs came together to gang up against the Sponsor+parties acting in concert. Most local companies have high insider ownership (much larger than Sabana's sponsor had) and in fact, many of them have controlling stakes (>50% ownership). Therefore, I suppose it should take quite some time for any sort of "market disciplinary actions" to take root...

Keynote speech by Tan Boon Gin, CEO of Singapore Exchange Regulation (SGX RegCo), at the REIT Association of Singapore Annual Conference 2025

What is striking about the announcement is that we, as in Singapore, have never had a culture of public pension funds investing in our market at the institutional level. Unlike in Malaysia or Australia, this injection of public monies at the government level is a new thing for us.

I would like to highlight three things to note about this deployment. The public monies will be given to external fund managers who are also expected to crowd in private capital, so the total will be a multiple of the public monies committed. There will be a focus on mid and small cap companies. And this is via active stock picking, so it is not just passive but active trading. So in other words, there is going to be more institutional participation in the market and more institutional participation in the mid- to small-cap companies’ space.

When I spoke to my Japanese counterparts previously, I complimented them on the success of their “value up” initiatives that have seen Japanese companies unlock value for shareholders and seen the Japanese market perform very well. The Japanese reminded me it had all started with the Government Pension Investment Fund, or GPIF, investing in their market many years ago.  External fund managers were entrusted with the public monies. They started engaging the companies they were investing in, pushing them to perform better and do more for shareholders. The market in turn rewarded the companies that responded by increasing the share price.

I believe this is what we have been missing in our market: market discipline imposed by institutional investors.  Hopefully, in the same way, the external fund managers entrusted with our public monies will be good stewards and push companies to do better,

https://www.sgxgroup.com/media-centre/20...lation-sgx

When behind-the-scene work is almost completed, the mouthpiece (Regulator) will declare the intention before the concrete action is announced by the market participants. Animal spirits have to be stirred up and then maintained. So everyone has been working very closely with each other and that bodes well for Mr Market to maintain its confidence.

Fullerton Fund Management launches Fullerton Singapore Value-Up, first retail fund under Equity Market Development Programme (EQDP)

Fullerton Singapore Value-Up (“the Fund”) invests exclusively in Singapore listed securities, across large, mid, and small caps, initial public offerings (IPOs) and secondary listings. Managed as a high-conviction portfolio of 20-40 stocks1, it seeks to outperform the FTSE Straits Times All-Share Total Return Index through active management.

The Fund focuses on catalytic growth and shareholder value creation. Through on-the-ground research and rigorous stock selection, Fullerton’s investment team identifies and actively engages with companies that are on a transformative journey to unlock shareholder value through corporate actions such as restructuring, divestments, share buybacks, increasing dividends and profitability improvements, amongst other considerations.

The Fund’s flexible mandate enables investments across all market capitalisation tiers, including mid and small-cap stocks, which represent a dynamic yet often under-owned segment of the market. Sector allocations are guided by prevailing market views and include financials, real estate, and industrials. The portfolio has exposure to dividend paying stocks and both accumulation and distribution share classes will be available to investors.

https://www.fullertonfund.com/newsroom/f...amme-eqdp/

[EnSabahNur]

Most local companies have high insider ownership (much larger than Sabana's sponsor had) and in fact, many of them have controlling stakes (>50% ownership).

The Japan comparison is quite interesting.

https://www.reuters.com/sustainability/b...025-06-19/

Over 2,000 firms hold shareholder meetings in June, of which 52 have received activist proposals, surpassing last year's record of 46, showed data from Mitsubishi UFJ Trust and Banking.
That is more than four times the 12 companies that received proposals in 2018 and 2019 toward the end of Abe's tenure.
Typically most proposals by activists and engagement funds are rejected. Still, some firms have subsequently introduced plans to increase returns even after unsuccessful votes.
"There's no need to despair. Even if a proposal is rejected management may continue to consider it," said strategist Nozomi Moriya at UBS Securities. "I think it's important to look at corporate action over the long run."

There is also an increasing number of cases in which firms adopt activist suggestions - in part or in full - in advance, to avoid a public proposal and any embarrassment to management that might bring.
"It's not that we expect to win our AGM proposals, a lot of them now get withdrawn before the meetings take place" said Paul ffolkes Davis, chairman of Rising Sun Management, an activist investment advisor to the Nippon Active Value Fund.
"The fact that we've never won one publicly doesn't mean to say we've never won one privately. Portfolio companies are engaging with us and acting on our suggestions more and more," Davis said.


Institutional investor engagement can be cooperative or it can be acrimonious

https://www.bloomberg.com/news/features/...ock-prices

Murakami is famous for his aggressive tactics and fiery language. “It’ll be a bloodbath if you do this,” a 2023 securities filing for Cosmo Energy Holdings, one of his targets, quotes him as telling a management team resisting his advances. “I’ll have your necks after this.” Cosmo had been preparing a “poison pill” defense, anathema to activist investors. That strategy offers shares to other holders to dilute the stake of a would-be acquirer. The Murakamis ultimately sold their position for ¥105 billion, netting a profit of ¥48 billion, according to CLSA estimates.


I don't know if this will result in meaningful change, and I am not sure if boards and CEO are ready for what might be coming.

Perhaps we should stock up on popcorn.