COMPANIES NEED TO SHOW UP FOR INVESTORS TOO
But building a new index, as critical as it is to recognise the performance of second liners, is only part of the story.
As Mr Chee pointed out during his speech at a Singapore Institute of Directors conference, companies themselves have to proactively engage shareholders and the investing public at large.
This means regular and active investor engagement that goes beyond annual or half-yearly earnings briefings. In short, senior company officials need to communicate more consistently and clearly and make their business activities more visible to the market. Done well, this will boost investor interest, spark liquidity and even engage institutional investors who for so long have focused on the bourse’s “big boys”.
But there may also be a need to re-examine the existing disclosure regime. Companies need some guidance on continuous disclosure, especially pertaining to sensitive forward-looking statements. This is because company officials may worry about regulatory or litigation risks of saying too much. So there may be a need to create a “safe harbour” for routine forward-looking disclosures.
Such strategic outreach will deliver more benefits than just stock price support. Besides enhancing shareholder value, it will, in time, also lower the cost of capital for these companies as they raise funds to propel their growth. Instead of turning to borrowings, they can fund their growth via the placement of shares which will find willing subscribers in the broader market, and especially amongst institutional investors.
In short, it creates a virtuous circle.
In the wake of global uncertainties and geopolitical turmoil, a lot of funds have flowed into “safe” Singapore in recent years, and especially into its wealth markets. Some of these funds are now seeking higher returns in equities as interest rates look set to decline.
For investors who have long looked past Singapore’s market in favour of regional plays, the message is that the winds are changing. And this time they’re blowing in Singapore’s favour.
If the US economy stays resilient and global markets avoid shocks, local equities could be heading toward their strongest year in more than 10 years.
Ven Sreenivasan is a former editor and journalist who has covered financial markets, economic and corporate news and aviation for more than 30 years.
