Chew Sutat – The importance of retail investors

Finally a sensible voice from the SGX spoke. A stock market without retail investors is like a bankrupt with no cash. The retail investors provide the life supporting liquidity in a stock market. Getting rid of retail investors is as good as saying goodbye to the big funds and to the stock market. Someone must feed the big funds with profits, and this can only come from the retail investors. For the last decade or so, the big funds are happily sucking away the invested funds of the retail investors to a point that it is critically dangerous, that there will be no retail investors left to keep the market alive.

The pathetic state of the local stock market when the volume generated were mainly from machines and the funds must be telling unless the people in the know choose to put on their blinkers. The pathetic value of many stocks in the main board is another indicator that the market is in the intensive care ward and could go kaput any time.

What is seriously wrong with the market is obvious. It needs to provide a level playing field for big and small investors. The retail investors cannot be victims to unfair practices like trading against machines and computers. These must be removed if the market is not going to die a premature death.

Derivatives or instruments that are pure gambling chips that destroy the value of stocks or against the true value of stocks are also detrimental to the viability of a stock exchange. When healthy companies could helplessly see their stocks being sold down indiscriminately because the funds bid them down through a complex web of derivatives with no regards to the sound fundamental of stocks, it is a very destructive process that must be stopped to save the stocks and markets. When good companies cannot grow the value of their stocks in the market, there is no reason for them to continue listing in the market. Similarly, retail investors cannot continue to plough their money into good stocks for long term investments only to be destroyed by derivative play.

The third point is the uncontrolled influx of unlimited number of stocks in a small market that could not swallow them. To make matters worst, many of the foreign stocks are fly by night stocks and investors have no real recourse to claim back their investments lost through foul play. The exchange has to act responsibility to protect investors and their money by not indiscriminately allowing questionable foreign stocks to be listed here.

Protecting the small retail investors is the key to a healthy and sustainable stock market. The small retail investors must not be left at the mercy of big funds and their destructive machines in an unlevel playing field. Looking at the long term, many serious flaws in the market system and mechanisms must be rectified or else the market is sure to head towards oblivion must quicker than we known. The truth cannot be hidden for too long. It is not only unhealthy, it is sick, very sick.

Would there be strong political will and a little wisdom to make the necessary changes to save the market?

Deep holes, weak leaders

This is the title of Thomas Friedman’s article in the ST today. Let me just do a précis of this article to make sense in the Singaporean context. I would leave out the irrelevant and may alter or substitute a word or phrase here and there to make it more interesting to read.

One of the most troubling features of today’s global economic crisis is the lack of political leadership anywhere. No one has the courage to tell people the truth. And the truth, alas, is that ‘five’ of the pillars of today’s global economy – Europe, America, China and the Arab world – have, each in their own way, squandered huge dividends they enjoyed in recent decades, and how they have to dig out of their respective holes with fewer resources, less time and, almost certainly, more pain.


There is no way out. But, as confronting these hard truths becomes unavoidable, I think we’re likely to see some wild, angry and destabilizing politics that could make the economic recovery even more difficult. Deep holes and weak leaders are a bad combination….


“Someone among the leaders must finally tell the people the truth: This fresh start can only be achieved with a radical first step,” he said….


But the leaders used their surpluses of power and wealth to ignore the United Nations’ Human Rights Report…Instead, they enriched a small slice of their populations and distracted the rest with shiny objects….


“To its credit, it used its huge export dividend to build 21st century infrastructure and to educate its people, creating a rich upper middle class. But the current leadership has not used this surging economic growth to also introduce gradual political reform. Corruption is as bad as ever, institutionalised transparency and the rule of law remain weak and consensual politics nonexistent. If growth slows and incomes widen further, more and more steam will build up in the system with no outlet, which is surely one reason that the country will reach ‘a critical stage.’


So for these countries, in different ways, these have been the years the locusts ate. Getting healthy again will be wrenching for all of us. At a minimum, it would need a sensible plan to fix the economy – which is what people want most and many in the business would surely support it. The country cannot wait until 2016 to do serious policy changes again.

Dr Lim Hock Siew, on the wrong side of history

A man of principle, detained without trial under the ISA for leftist political belief, passed away on 4 June 12 at the age of 82. He could have walked out of prison earlier if he just said he would denounce the use of force to overthrow the govt. He refused on the ground that his detention was unjustified and chose to stand by his principle. He said,

"I am not interested in saving Lee Kuan Yew’s face. This is not a question of pride but of principle. My detention is completely unjustifiable and I will not lift a single finger to help Lee Kuan Yew to justify the unjustifiable. In the light of what you say, is it not very clear that I have lost my freedom all these long and bitter years just to save Lee Kuan Yew’s face? Therefore the PAP regime’s allegation that I am a security risk is a sham cover and a facade to detain me unjustifiably for over nine years."

Dr Lim was also a founding member of the PAP but broke away to join another party, the Barisan Socialist.

A dirty house

When the house is dirty, the cockroaches, ants and flies will make it their homes. They will infest a dirty house to run riots in every nick and corner. They will become irritants to the owners. The owners can start spraying them and see their dead carcasses littering everywhere. But they will not go away. More will return to occupy the dirty house.

A more effective way is to clean the house, put it in order. Get rid of bad habits, dirty habits, disorders, and impose strict discipline and good behavior. When a house is in order, when a house is clean and not shitty, the roaches, rats, flies and ants will find it unsuitable or inhospitable to stay. They will go away naturally and will not reappear.

Buying insecticide spray, swaps, rat poison, roach traps, is only a temporary solution. The real and long lasting solution is to keep the house clean. And gluttony, eating too much and dropping crumbs everywhere, too much unfinished and unable to consume food, too will cause a house to become unhealthy and smelly. That’s when the irritating pests will return to haunt the owner.

Keep the house clean and in good order. And don’t anyhow bring in fair weather friends who are only interested in sponging and feasting in the house and with one foot outside, ready to scoot when the buffet is gone.

After Hougang

With Png Eng Huat secured as the newly elected MP, the WP has started to do what they need to do to serve the Hougang residents and win more hearts for the next GE in 2016. Desmond Choo too would be busy mapping out his strategies to win the Hougang residents to his side, which, given the current development and sentiment, is likely to be a daunting task.

Winning back Hougang is a much smaller issue to the ruling party than the bigger picture of winning the rest of the Sinkies and to remain relevant in 2016. What is the party’s position in the aftermath of the Hougang? What would it be thinking and doing to win back the support it has lost, not only in Hougang but across the island? I think they must know that the ground has shifted. What would the master strategists be plotting after the Hougang fiasco?

The easiest task of all would be to relook at the policies and how they can be tweaked or fine tuned to benefit the original citizens more than new citizens or PRs. The people’s aspirations and expectations are not difficult to match. The people are not asking for the sky. They do not expect money to be thrown at them for their votes. The Hougangkia have made sure that this point was not missed during the by election. The electorate is sensible and is just looking for more favourable and people centric policies. Any attempt to sugar coat or to smooth talk unfavourable policies as favourable policies, like affordability when it is not, would be taking the electorate for granted and would only backfire as in the by election.

Positive actions for concrete positive results would easily win back the fence sitters or those that have switched camps. Many still would not want too big a change. What could be unfortunate would be negative thoughts and negative actions that would only generate more anger and distaste. It is very easy for some to think of how to deal with those that were opposing the party or spoke ills of the party. It is very easy to bring out the hatchet and go hacking away. An ‘inquisition’ will go down very badly and will not work in an increasingly transparent environment.

Like they say, winning a battle only to lose a war, any mis-steps and miscalculations along such line will only lead to more desertion from the ranks and an abandonment of the party. The party cannot afford to create more distrust and bad publicity. The brash tactics of the past belonged to the past and a new strategy of winning the electorate would have to be formulated on the basis of mutual trust, respect and fair play. Are there still elements that think it is still acceptable and doable to return to the old ways?

There are many critical voices in the social media that meant well. Would they be embraced and won over by genuine and good policies with good intentions, or would there be a witch hunt? Witch hunting is as easy as doing the right thing with right policies to better the lives of the people. It is just the other extremity and will have extreme results.

Ironically, the party should thank the critical voices that want the party to do well, to look after the people well. Ironically too, the enemies of the party are the hatchet men that could only think of wielding the choppers to go around slashing indiscriminately. Such negativity will never go unnoticed and will only bring more adverse reactions to the party. The internet can be very unforgiving and transparent, and go viral.

Win the critics and the sceptics by genuine good works and policies, and everything will fall back in place. Dismissing the critics/sceptics and not doing the rightful, and to take on a combative style to deal with everyone as enemies will lead to a sure gone conclusion. The people are not your enemies.

Could we see a renewed party with a conviction and on a constructive path to redeem itself, or a vindictive party on a rampage? Would the party embrace the change, the new normal and take on the new challenge in its stride? The third path is to do nothing and continue with business as usual, as if everything is ok.