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01-10-2010, 09:40 AM
Business Times - 01 Oct 2010
Use research on ADRs, STI stocks to woo retail players
By R SIVANITHY
SOON, local investors will be able to invest in 19 large Asian companies via American Depository Receipts (ADRs) to be quoted on the Singapore Exchange's new GlobalQuote board. Among the 19 are supposedly famous names that include Internet search provider Baidu Inc and China's largest maker of photovoltaic solar panels Suntech Power Holdings - both of which are only traded in the US - and Chinese oil giant PetroChina, which is also listed in Hong Kong.
If successful, more such ADR listings are envisaged and this could well be a major cornerstone for SGX's future growth. It is therefore crucial to ensure success. While institutional interest can be taken as a given, it is equally vital to encourage retail support.
From the experience over the years in segments such as structured warrants and other derivatives such as single-stock futures and options, it should be obvious that without the vast resource that is the retail public, any initially impressive performance posted by a new instrument simply does not last - the retail public has to be engaged if any new initiative is to take off.
How might SGX draw individual players in? By collating all the latest research on the companies involved and posting this on its website.
This is because although investors here may recognise some names - or have some familiarity with the prospects for bigger names such as PetroChina - not all the prospective listings would be instantly familiar to the man in the street, such as Aluminium Corp of China or Netease.
SGX could either gather the research itself from the big brokers who cover these stocks or request it from the companies themselves. Also, the research doesn't have to be that up-to-date - as in posted on the day it is published - since institutional clients of research houses pay for exclusivity. But reports that are say, a few days old, would still be of great use to the investing public and their availability would go a long way towards generating interest among retail investors who cannot reasonably be expected to know and evaluate the prospects of several foreign companies that are to be quoted at the same time.
As a further service to small investors, this posting of relatively current research on SGX's website should be extended to include Straits Times Index stocks, particularly those that are traditionally seen as institutional plays for which research is not widely available to the retail public.
(Actually, index guardians should make widespread research coverage and availability a requirement for inclusion in a benchmark such as the STI, but that's another story).
In the past month, stocks of the Jardine group, for example, have risen continually to all-time highs, led by Jardine Matheson, Jardine Strategic and Jardine Cycle & Carriage. These gains have played a major part in propelling the STI to new two-year highs, yet it would be fair to say that few retail investors have any idea what the reasons are for Jardine's surge, or how the investment community views the Jardine group (or for that matter, the complex relationship between Jardine stocks).
Because of the pivotal role the STI plays in daily market life, SGX, as a service to the retail public, should instruct not just Jardine but all 30 STI members to provide the exchange with the latest, publishable research and place this on its website. Again, this doesn't have to be on the day the reports are released; a delay of a few days would be acceptable to keep clients happy.
Use research on ADRs, STI stocks to woo retail players
By R SIVANITHY
SOON, local investors will be able to invest in 19 large Asian companies via American Depository Receipts (ADRs) to be quoted on the Singapore Exchange's new GlobalQuote board. Among the 19 are supposedly famous names that include Internet search provider Baidu Inc and China's largest maker of photovoltaic solar panels Suntech Power Holdings - both of which are only traded in the US - and Chinese oil giant PetroChina, which is also listed in Hong Kong.
If successful, more such ADR listings are envisaged and this could well be a major cornerstone for SGX's future growth. It is therefore crucial to ensure success. While institutional interest can be taken as a given, it is equally vital to encourage retail support.
From the experience over the years in segments such as structured warrants and other derivatives such as single-stock futures and options, it should be obvious that without the vast resource that is the retail public, any initially impressive performance posted by a new instrument simply does not last - the retail public has to be engaged if any new initiative is to take off.
How might SGX draw individual players in? By collating all the latest research on the companies involved and posting this on its website.
This is because although investors here may recognise some names - or have some familiarity with the prospects for bigger names such as PetroChina - not all the prospective listings would be instantly familiar to the man in the street, such as Aluminium Corp of China or Netease.
SGX could either gather the research itself from the big brokers who cover these stocks or request it from the companies themselves. Also, the research doesn't have to be that up-to-date - as in posted on the day it is published - since institutional clients of research houses pay for exclusivity. But reports that are say, a few days old, would still be of great use to the investing public and their availability would go a long way towards generating interest among retail investors who cannot reasonably be expected to know and evaluate the prospects of several foreign companies that are to be quoted at the same time.
As a further service to small investors, this posting of relatively current research on SGX's website should be extended to include Straits Times Index stocks, particularly those that are traditionally seen as institutional plays for which research is not widely available to the retail public.
(Actually, index guardians should make widespread research coverage and availability a requirement for inclusion in a benchmark such as the STI, but that's another story).
In the past month, stocks of the Jardine group, for example, have risen continually to all-time highs, led by Jardine Matheson, Jardine Strategic and Jardine Cycle & Carriage. These gains have played a major part in propelling the STI to new two-year highs, yet it would be fair to say that few retail investors have any idea what the reasons are for Jardine's surge, or how the investment community views the Jardine group (or for that matter, the complex relationship between Jardine stocks).
Because of the pivotal role the STI plays in daily market life, SGX, as a service to the retail public, should instruct not just Jardine but all 30 STI members to provide the exchange with the latest, publishable research and place this on its website. Again, this doesn't have to be on the day the reports are released; a delay of a few days would be acceptable to keep clients happy.
