Singapore stock exchange
The Stock Exchange of Singapore was formed in 1973 with the termination of currency interchangeability between Malaysia and Singapore. The Singapore International Monetary Exchange was started in the year 1984. On December 1st, 1999 by merging these two well-known financial institutions, the Singapore Stock Exchange was shaped, thereby creating a single large stock market. Shares of companies operating in construction, hotel and restaurant, manufacturing, property, transport/storage/communications, finance, retail and other multi-industry sectors are listed in the Exchange. Ranked among the top 30 major global stock exchanges, it is the first Asian demutualised and integrated securities and derivatives exchange.
Advantages of getting listed in the Singapore Exchange
Singapore, a key financial centre with a large concentration of financial institutions and traders has a well established IT, economic and financial infrastructure. The Singapore Exchange prides itself as a role model in capital market innovations and fund management. Singapore is one of the few countries in Asia that has been able to attract a large pool of global investors every year. Now around 700 fund managers work in this small nation, managing more than 400 billion dollars. The fast, efficient processing facility lists the bonds in the Singapore exchange within a week, which normally takes more than 3 to 4 weeks in other stock exchanges. The cost of listing is relatively low in Singapore when compared to the listing fee charged in other stock exchanges. The listing fee is charged in Singapore Dollars.
The Singapore Exchange is an internationally recognised marketplace, where stocks of more than 1000 companies are listed. It includes the stocks of more than 200 multinational companies, listed since the early 1990s even though these companies and their operations are not located in Singapore. The profile of the stock of a foreign company, which gets listed on this transparent and well-regulated international exchange, gets greatly enhanced. More than 100 research analysts and over 20 research houses do research on the Singapore stock market trends, investing opportunities and publish reviews. Foreign companies listed in this exchange enjoy higher trading turnover because of investor familiarity and public interest in stocks of multinational companies.
The Straits Time Index (STI)
The Straits Time Index (STI), the main stock market index is based on the performance of the stocks of 50 most traded stocks in the Singapore Exchange. The STI is the successor of the Straits Times Industrials Index (STII), which was in use till September 1998. The STI represents the average daily traded value of more than 80 percent of the stocks over a 12-month period. Professor Tse Yiu Kuen from the Singapore Management University along with the experts from the Singapore exchange and the Singapore Press Holdings jointly developed the STI. The STI is put under formal review atleast once annually, and a review is made on an ad-hoc basis whenever necessary.
The Singapore Stock Exchange follows a unique methodology in the construction of the STI. The main rules followed are:
1. Rank all stocks listed in the Singapore Exchange by its liquidity, which is measured from its average traded value over a period of 12 months. This rank is compared with the rankings over periods of 6 to 36 months, so that a comparison of the liquidity pattern of the stock can be made over short, medium and long terms. However, the primary ranking is done using the 12-month average traded value.
2. Stocks are ranked according to its market capitalisation and this rank is added to a table
3. The sorting of stocks is done according to its industry subdivisions
4. Using the above information, the constituents are selected
5. Thus a weight based on its respective free floating percentage is applied to the constituents
The Central Depository Limited (CDP)
The CDP, a subsidiary of the Singapore Exchange Limited (SGX), oversees the depository, clearing, settlement and computerised book-entry services for the shares traded in the SGX. As a central party, it holds the shares on behalf of the investors in CDP accounts. As a clearing house, all daily transactions are settled and cleared using the book-entry settlement system. In the computerised book entry settlement system clearing takes place almost instantaneously once a trade is executed. As a mediator or a central party to the trade, it guarantees the transactions for both the buyer and the seller. It accepts the matched orders and moves the payments and shares to the rightful parties. Once the transaction is completed, the book-entry settlement system will reflect the changes to the share ownership in the securities accounts.
A customer can also approach the CDP for the following services:
1. To open or close a direct securities account with the CDP
2. For depositing and withdrawing scrips, i. e. the physical certificates regarding the ownership of shares
3. To transfer shares to other parties and into other accounts
4. To update personal information and changes in signatures
5. For checking backdated or recent shareholding balances
6. For processing applications for services like Direct Crediting Services, CDP internet access facilities and CDP phone connections.
Information for new investors
The Singapore Exchange conducts workshops/seminars and short term courses to educate both the new investors from Singapore and also from other countries. The leading experts in the field are invited to lead these special events and seminars, which are helpful to both the new comers and experienced investors. Moreover, educational articles and reading materials on stocks and shares are published to guide the investors.
When an investor places an order to buy or sell, it is directed to the screen based trade matching system and the transaction will be immediately executed if there is a matching buyer or seller. All transactions not executed on a day will lapse and it must be re-entered on the next trading day. Requesting the services of experienced stock brokers will be helpful for new investors. Payment for shares can be made via cash or cheque and also through the Electronic Payment for Shares (EPS) system. A customer has the freedom to quote the price at which he is willing to sell or buy a share but the market forces of supply and demand, the domestic and foreign economic and political events and many other factors normally determine the price of shares on a trading day. If a customer quotes a higher price for a share when it is being traded for a much lower price on a particular day, he may not find a buyer for that share. Customers can also wait till the value of a particular share reaches the price at which they wish to sell, which is not a loss because companies in Singapore normally pay annual and even half yearly dividends.
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