Tuesday, August 26, 2014
SGX: Starting from 19th Jan ’15, SGX will reduce the standard board lot size of securities listed on SGX from 1,000 to 100 units, making it more affordable for retail investors to invest in a wider range of equities, including blue chips, and enable them to build more balanced and diversified portfolios. The reduction will apply to ordinary shares, including shares traded on GlobalQuote, REITS and business trusts, company warrants, structured warrants and extended settlement contracts. Existing counters with board lot sizes of 100 or less units will remain unchanged. The reduced board lot size will benefit all investors and make it easier to invest in blue chips and index component stocks which tend to be higher-priced. It will also allow institutional investors to better manage their risk exposures through finer asset allocation of funds. Board lot sizes for exchange traded funds, American Depositary Receipts and fixed income instruments, including retail bonds, Singapore Government Securities and preference shares will remain unchanged. In light of the changes, SGX aims to implement a minimum subscription and allocation of $500 for mainboard counters and $200 for Catalist counters, on investors applying for shares during the a company’s IPO period. We opine that the latest move could possibly aid to increase the trading volumes of Blue Chip stocks on SGX, which are often perceived as being “too expensive” by retail investors, in terms of absolute value per lot. SGX currently trades at 22.5x forward P/E.