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9/22/2011

The horse is sick

It was a strong and healthy horse. The owner saw the great potential in this animal. He had great plans for the horse to run in all the great derbies across the world, Singapore, Hongkong, Dubai, American, Australian, English etc, to be a champion among the best of race horses.

The best international trainer and manager were hired to groom this horse. World class vets, dieticians, the best diet, drugs and stimulants were injected into the horse. A well planned training regime and the best computer programmes to monitor its progress. The best and finest of everything money can buy were bought for the horse.

For a while things looked promising. The horse was lean and trim, looking more like a race horse. The bets were good and winnings started to roll in. International syndicates were brought in to raise the bets. Big dreams and big time gambling and big egos were fanned.

Then everything started to go wrong. And the horse fell sick, very ill. The punters lost everything and lost interests as well as their capital. The international syndicates also started to lose interests as the winnings got smaller. Their investments were big and they expected big returns. But with all the punters packing their bags after losing everything they had, there was nothing left for the pickings.

What went wrong? Actually it was too obvious. Everyone knew what went wrong except the owner. Even the international manager and trainer knew what was wrong from the start. But they were paid well and tried their best, but not telling the owner. Or maybe they too believed that they could do wonders to the horse.

It was never a thoroughbred to start with. It was a strong and sturdy work horse, a farm horse. It would work hard in the farm and be very productive in its own way and at its own pace. It could never race with the best in the world. It could not take the drugs and the regimes of a race horse.

The name of the horse is SGX.

In the last few sessions, the trading volume has dropped to a level never seen before. It was scary. The investors are fleeing or have gone hiding. They could not win in a system that favours the big players and their machines. Small innocent men are no match against machines. They lost and lost and lost. So were the remisiers trying to trade against the high speed computers.

The next victim would be the brokerage. Their overheads are high. Management, staff, rentals, hardwares, all cost money. The miserable trading volumes would not be able to support their overheads. Retrenchment and downsizing are imminent.

The big players and the machines will find it no longer lucrative to be in the market when there is a dearth of investors. They can’t justify their presence without the comparable income and winnings from the market. They will quit for greener pastures.

The listed companies will find it meaningless to see their shares become penny stocks, practically worthless and unable to raise funds from the market. There is no point paying the listing fee to be in a cheap stock market. It is a matter of time before they start to delist from the exchange as well.

New IPOs will have problems finding takers. The valuation will be low and not worth listing. Even if they are successful in listing, the shares would soon become penny stocks.

The other big losers will be the two great sovereign funds. The values in their blue chip holdings too will go dwindle like any other stocks.

Can the sick horse be nursed back to health? The toll for indiscretion and megalomanic dreams are high. The infrastructure and supporting base of small investors are badly hurt and near to ruins. The industry is at a point of self destruct.

Whither the SGX? Who is killing this workhorse?

9 comments:

Anonymous said...

Hot housing anything will only lead to early demise. Using all means to make a farm horse into a Derby champion is only the dream of his greedy owner. However, a dream it shall remain. Likewise, a tiny rock will remain a tiny dot ultimately.
Me not spouting wisdom; it is just commonsense and the law of nature.

Like to say that in Sin, a big house does not necessarily have a big family. More often than not much of the achievement of Sin goes to waste except the boosting of ones' ego. Where is the meaning and purpose???

patriot

jjgg said...

Some of us are intent to punch above our weight...the problem is selecting who and what to punch..it seems we've chosen a brick wall..

tom lim said...

news from Hong Kong ...

Hong Kong Exchanges Has No Need For High-Speed Trading, Says Li
2011-09-21 05:57:15.511 GMT


By Nick Gentle
Sept. 21 (Bloomberg) -- Hong Kong Exchange & Clearing Ltd.,
the world’s No. 1 bourse operator by market value, has no need
for high-frequency trading even as it has the “slowest trading
machine,” Chief Executive Officer Charles Li said.
The Chinese city’s bourse operator has its own market
structure and doesn’t need high-speed trade right now, Li said at
a conference in Hong Kong. The exchange company doesn’t believe
a merger with another bourse operator would add any value and is
concentrating on luring more Chinese investors to the formwer
British colony.
Singapore Exchange Ltd., the southeast Asian city-state’s
securities market operator, is also not looking for other merger
opportunities, chief executive officer Magnus Bocker said at the
same conference.

Chua Chin Leng aka redbean said...

Hi jigg, welcome to the blog.

And Tom, the Hongkies are definitely smarter than the Sinkies. They will not be easily duped.

The high speed engine is for the big funds to take advantage of technology to clean up the small traders. It is just like a deep sea trawler and their big nets, and hi tech computers.

The sin of allowing high speed trading is to create an unfair trading platform, a violation of the rules and regulations of all the stock exchanges.

One day the stock exchanges will be sued for allowing this to happen.

Anonymous said...

Blind to their own wrong doings.

Anonymous said...

'The Hongkies are definitely smarter than the Sinkies'

Well, who can argue with that when the Ogre already confirmed that a long time ago. No need to compare. Just look at the way Hongkies go about demanding compensation from DBS for the investment debacle a year or two ago and got a much better deal than Sinkies.

Gintai_昇泰 said...

What an analogy! But it ts the sad truth. Thks for the good read.

Chua Chin Leng aka redbean said...

Hi gintai, you must be having fun with your nice bike.

Anonymous said...

Experiment with more wonder drugs will keep it crazy for a few more days before it drops dead.