SGX – a victim of conflicting demands and interests

Sivanithy of Business Times has an article in the Mypaper today discussing about the conflicting interests of shareholders and stakeholders and between the pull of derivatives and equities. The shareholders want more profit and derivatives are the instruments to do just that while equities are no longer able to provide the meat for the profit hungry shareholders. Equities are old fashion and no longer serve their purpose to the profit oriented shareholders in the SGX. In that case would it be a simple solution, remove the non performing equity market and consolidate all resources to the derivatives market for best returns. I am sure the SGX shareholders would love that.
The question is, can the derivatives market exist on its own without the equity market? Possible if the derivatives contracts are written on iron ore, rubber and mickey mouse. There is no need for equities and there is no place for an equity market. Is that true?
 
Why is there a stock market for equities in the first place? What was the primary role of the stock market and is this role no longer relevant and no longer needed? In theory Sivanithy said, ‘the equity market I sof paramount importance as,…at least it provides the economy’s link with the future by allocating scarce resources to their possible uses. What is this paramount role and possible uses? Other than the collateral benefits of an equity industry and the supporting services, the stock market is a source of fund for the industries, to support the growth and expansion of industries. Is this no longer necessary?
 
What are the major contributions of derivatives to the economy other than as another form of gambling chits? The derivative market can exist on its own steam by selling gambling chits based on fictitious non existing commodities, good and services or products. It is a pure gambling business once the link to equities is delinked.
 
The SGX is like a forlorn girl undecided which guy to go with, one stable, solid and conservative but lack the vibrancy and extravagance, and the other all hyped and very lucrative, all glittering tinsels but no substance. Actually the dull and conservative equity market could also be glittering and exciting as it was before. Its attractiveness and usefulness have been hijacked by the advent of derivatives that rode on it but relegated it to the backdrop as old furniture.
 
Whose interests shall prevail? Can the SGX survive and be viable without the equity market or can both exist separately without the linkage that is damaging the primary role of equities and the reason for its existence? Can the SGX have its cake and eat it as well, without destroying the whole equity market and industry and thrives on the fictitious gambling chits called derivatives? Or should it be, can the SGX continue to exist if it does not serve its original purpose to begin with?
 
Why should companies list their shares in an equity market that is dysfunctional and be used as objects of little value to support the derivative market at their expense. Why should the companies pay high listing fees for nothing or even risk losing control and ownership when the value of shares reaches junk status? Why should the supporting investors keep throwing money into an equity market to see the value being eroded by derivatives and algo trading that have no interest in the fundamentals of a business and the intrinsic values of the stocks?
 
I think it is not so much as a conflict of interests between shareholders and stakeholders but an issue of greed with no responsibility on the consequences inflicted to a whole industry, the viability, sustainability and the main reason for the existence of a stock market.