Wednesday 21 January 2015

SGX: Retail demand for 100-share lot encouraging

Blue chips had most orders; analysts less upbeat, citing low volume
By Wong Wei Han, The Straits Times, 20 Jan 2015

INVESTORS showed keener interest in blue chips yesterday as new rules allowing smaller minimum board lot sizes kicked off.

The Singapore Exchange (SGX) said the response to the new initiative was encouraging, although market observers were less convinced.

The SGX said in a statement: "Of the eight Straits Times Index component stocks priced above $10 each, 70 per cent of the orders were of 1,000 shares and below.

"This compared with an average of 51 per cent of orders at the minimum 1,000-share lot in October to December 2014."

Reducing board lot sizes was announced last August and is the centrepiece of SGX's plan to spur stronger retail investor participation.

Allowing 100-share lots cuts the cost of buying expensive blue chips. A 100-share batch of DBS stock would have cost $1,970 yesterday based on the closing price of $19.70, down from the $19,700 that a 1,000-share lot would require.

STI component stocks, including Keppel Corporation, DBS, Jardine Matheson Holdings, Jardine Strategic Holdings and UOB, had the most orders below 1,000 shares, suggesting that investors are backing the initiative.

"For instance, 25 per cent of orders for Keppel shares were of 100 shares each, while 41 per cent of orders for DBS were of 100 shares each," the SGX said.

"For Jardine Matheson and Jardine Strategic respectively, the proportions of 100-share orders were 61 per cent and 27 per cent respectively.

"For UOB, 9 per cent of orders were of 100 shares each."

SGX securities head Jenny Chiam said: "The activity in the Singapore stock market today has been encouraging, suggesting that retail investors have leveraged the 100-share board lots to access higher-priced stocks."

But industry observers The Straits Times spoke to were less upbeat. They pointed to the STI's trading volume yesterday, which came in at 163.8 million shares, which was below last Friday's 295.4 million shares.

It was also the third-lowest day this year for the number of blue chip shares traded.

"I have seen no visible change in market activities, and the trading of 100-share lots was not at all significant today when sentiments were dominated by concerns from the Chinese market after the government announced a crackdown on speculators on Monday," said Mr Jimmy Ho, a UOB Kay Hian remisier and the president of the Society of Remisiers Singapore.

"It will take some time before investor awareness will increase on this new implementation, especially for those who got their hands burned in last year's penny stock crash.

"We won't see any significant change any time soon," Mr Ho said.

OCBC Securities managing director Raymond Chee said: "We saw some investor participation in reduced lot sizes, although the volume of such trades was not significant as yet.

"In time, as investors get familiarised with the change, we are more likely to see a greater take-up, particularly if there is an improvement in the overall market sentiment."

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