Singapore stocks: Once bitten, twice shy

[weijian]

The SGX chairman (of past and present) has always drawn a million dollar salary. Finally, the current one Chairman Koh has the decency to write his own letter this year. Let's hope it continues. Chairman Koh's letter has asked for some sacred cows to be slayed (below are excerpts from the annual report in italics):

Only when we support our own stock market, can we attract foreign companies to list here. After all, if we do not support our own market, why should we expect others to do so?

Winning and losing are par for the course in every marketplace, whether it is listed shares, over-the-counter derivatives or cryptocurrencies.

But a spirit of caveat emptor must apply across the board, with investors actively owning their investment decisions and outcomes in domestic or foreign shores

Will this plead be worth the million dollars that SGX shareholders pay him annually?

As pillar of Singapore financial ecosystem, SGX needs help to build investor demand: chairman

It was the first time in 14 years that the chairman had issued a separate letter from the chief executive officer in SGX’s annual report.

https://www.businesstimes.com.sg/compani...d-chairman

Tan Boon Gin, the regulator guy, takes the opportunity to parrot his boss's boss and lobbies for the sacred cows to be slayed. This sort of "intense public lobby" feels relatively rare in the local context and may suggest that resistance is just as strong from other stakeholders. So, who's going to win eventually?

Institutional funds have a role to play in driving governance and performance

The second part is the link between corporate governance and access to capital and how they should complement each other. I believe this has also not been lost on the ACGA. The CG Watch covers not only the performance of regulators such as the Monetary Authority of Singapore (MAS), Accounting and Corporate Regulatory Authority and Singapore Exchange, and gatekeepers such as auditors, but also the contribution of the providers of capital, shareholders and investors.

https://www.businesstimes.com.sg/opinion...erformance

It seems like the sacred cow remains as Minister Gan gives a tight slap to SGX Chairman/RegCo Head in the latter's own backyard.

Prudent because reserves shouldn't be used in this imprudent way as it is akin to raiding the reserves. Maybe the NTUC guys should be in charge so that the SGX folks get their way?

MAS review group exploring use of seed capital for equities market: Gan Kim Yong

“While there have been suggestions to channel sovereign monies into our equities market, it is not practical to rely on sovereign monies alone to sustain these funds and to support the equity market,” he added.

Gan, who is also deputy prime minister, instead called for the crowding in commercial capital on a sustained basis – such as institutional wealth, individual investors and family offices – as a key measure to stimulate market interest and maintain trading liquidity.

He was speaking at the Singapore Exchange (SGX) Group’s 25th anniversary ceremony on Thursday (Jan 2), which coincided with its first trading day of the year.

https://www.businesstimes.com.sg/compani...n-kim-yong

[CY09]

I propose that stricter EGM rules be proposed. The problem is that many towkays hold too much power where once they have a controlling shareholder stake in the company, they become stingy and share little dividend or asset unlocking actions. As a result, much value is locked up and the only ones who can realise the value are the towkays themselves

How can we solve this? For starters, during EGM, maybe the rule can be in placed where the controlling share holder/affliates and the 5/10% who had convened EGM will not be allowed to vote. The rest will be the ones who decide the fate of the company. In this way, it opens to an easier route for unlocking of asset value. I would imagine if such rule is enacted, the first which would be strip away or delisted is Haw Par Group, the estate of Wee Chow Yaw and UOB stakes form a large shareholding block and blocks off any attempts to monetisation, if they are not allowed to vote along with the 5/10% who convened the EGM, it is highly likely retailers would opt for asset stripping *Haw Par's UOB shares is very liqudable. Another would be Great Eastern Holdings, another OCBC affliate, partly owned by ex President Tony Tan and Senior Minister Teo Chee Hean

Given this sort of climate, towkays will know they cant use a small portion of money to hold great wealth and install their family/friends in the management of smaller subsidaries Think of it like a dynasty control where your loyal lieutenants/captains are given a small company to run and retired ministers are given roles in your board of directors without supposedly much contribution. The whole dynamics will change when OPMIs are now given more power.

With more delisting in place, investors such as insitution and hedge funds will know more value can be unlocked and then start investing in SGX because they know the adjudged balance sheet value can be realised and undervalued assets can easily be stripped and sold (such as in Haw Par Group, Hotel Royal, Yangzijiang Financial, OUE REIT and Oxley Holdings case).

To summarise, excluding (a) controlling shareholders or the party the EGM is convened against and (b) the parties who convene the EGM, the rest of the shareholders can vote like how juries act in court will work wonders. But I am quite sure the rich ppl in Singapore's society will block it and pressure the cabinet (a few are already in or have influence in the cabinet decision making) because it makes life difficult for them- (i) not being in the driver seat to block asset monetisation and strangle OPMI and (ii) installing themselves, their family and friends into management position for well paying jobs (HRnet, Sing Holdings, Hor Kew, Kimly Holdings in the past before the controlling owners were banned for 05 years from being hired by the company).

[weijian]

hi CY09,

These are innovative suggestions but who will spend resources on time and legal to convene an EGM if they are not allowed to vote? I surely wouldn't if I am the 10% shareholder. The rules governing an EGM are probably found in the Companies Act and Listing Act. This means any modification of the Companies Act will also affect private companies, isn't it?

My personal opinion is that tackling this issue should be modelled after the "Iceberg theory" where 20% of the symptoms is easily seen or resolved, but 80% of what causes those 20% symptoms are either hidden or too much of a sacred cow to slay. Without slaying sacred cows, this will be piecemeal changes at best. But as OPMIs, we can only choose how to deal with the cards we are dealt with, and not be held back by the cards we want.

The local SGX market is just 1 choice. There are many other choices if this choice isn't ideal. But when things go to the extreme where no one chooses it (local SGX market) and this trade becomes extremely lonely, the local SGX market then turns into a good choice over other crowded markets. This is what makes investing challenging (and interesting) I suppose.

[CY09]

It depends on how the voting bloc works. Lets say my opposition is the controlling shareholder of 40%. My bloc is 10%.

In current reality, when an EGM is convened for asset stripping, the controlling shareholder can vote, this results in an instant 40% against my 10%. However, if both parties are taken out of the equation, it means the rest of the 50% will decide. It evens out the competition.

And if enough of minorities are fed up with situations such as, the family gets salary of higher percetage of profits relative to dividend, the results of vote may go in the favour of the 10% who proposed the motion of the EGM. In a way, it is giving up your 10% voting rights in order to negate the large block owned by the controlling shareholder/family. I have always wanted to target Oxley Holdings because it holds supposedly valuable hotel assets that it does not want to monetise despite questions during AGM.

In oxley case, the controlling holds 72%. Current reality is that no one can go against their actions where a supposedly sale and unlocking of Singapore hotels will help clean off the high interest debts, unlock NAV potential (current PB is 0.37) and turn the company profitable. However, a 72% bloc is blocking things. So if 10% of shareholders convene an EGM and then 82% cannot participate, the 18% OPMI might be tempted to know I can double my value and then vote in favour of the 10%'s proposal.

For your last part you are right in saying why should i agonize over a small pool when I can go to other markets to invest in. I have done exactly that where other markets have better corporate goverance and self regulations by towkays. Over time I have been changing my Sing Dollar to Hong Kong Dollar and US Dollar to buy such shares. Surprisingly as a Singaporean, most of my assets are now overseas, of course I have to bear the FOREX risk

[weijian]

It depends on how the voting bloc works. Lets say my opposition is the controlling shareholder of 40%. My bloc is 10%.

Hi CY09,

In essence, what you propose is a form of dual class shares where "one vote is less than one vote".

You are only seeing things from your angle of "my bloc" of 10% and not seeing things from the opposition's 40%. Unless there are interested party transactions, preventing the majority owner to vote simply encourages no company to get listed or continue to be listed. From a principle of fairness, it may actually violate the Constitution of Singapore and if it ever get enacted, one of the Towkays could easily challenge this change in court as unconstitutional. And if the ruling ever gets overruled, in Spore's context, one can be sure that the person who pushed the initial change will have their career ended.

[CY09]

It does not violate any section of Singapore Constitution (as of Jan 2025), not sure of the sections of the companies act though because I didnt browse through it on AGC website.

However, your last sentence would likely happen (99.95% confidence interval one tailed) even if this one-time policy proposal is signed; that civil servant will be remembered as the guy who tried to usurp the Towkays way of clenching their fist around their empire of companies through fragemented shareholdings of affliates or having controlling stakes. Likely he/she will not continue in policy development or strategic planning roles, but posted to operations and enforcement roles instead