SGX and MAS issued their response to the joint consultation paper on the Review of the Securities Market Structure and Practices last weekend and as part of this said they would be proceeding with a minimum share price for SGX mainboard listed stocks of SGD0.20 ($0.16).
“This is to address risks of low-priced securities being more susceptible to excessive speculation and potential market manipulation,” SGX said.
The move is in line other major exchanges such as the New York Stock Exchange (NYSE), which requires stock prices to stay above $1 per share over a 30-day period.
A survey of stock prices of SGX mainboard shipping and offshore listed companies by Seatrade Global showed that there were nine companies that were currently trading below SGD0.20 per share.
These are marine equipment supplier BH Global (SGD0.13); dry bulk shipowner Courage Marine (SGD0.06); shipping trust FSL Trust (SGD0.09); offshore vessel owner and builder Otto Marine (SGD0.071) Chinese shipbuilder JES International (SGD0.073); drillship owner Jasper Investments (SGD0.037); container line Samudera Shipping Line (SGD0.175); Indian shipowner Mercator Lines (Singapore) Ltd (SGD0.09); and marine equipment supplier Beng Kuang Marine (SGD0.184).
The move would not be an immediate one with the minimum share price one of a number of initiatives to be phased in over a 24-month period, and companies would be given time to try and comply with the new regulation. “A transition period of 12 months will be given to affected issuers to undertake corporate actions to meet the new requirement. This proposal will, over time, improve the quality of issuers listed on the SGX Mainboard,” SGX and MAS said.
However, many of the shipping and offshore marine stocks listed above have thin volumes and have consistently traded at below the SGD0.20 minimum over the last 12 months. Otto Marine for example has a 52-week high of SGD0.10, FSL Trust a high of SGD0.12, and Mercator Lines SGD0.13. In fact only JES and Beng Kuang have traded at or above SGD0.20 in the last 12 months.
Of course markets could turnaround and these companies stock prices could improve, but for many a SGD0.20 minimum looks like it could be a struggle.
Meanwhile, in some good news for small investors, the lot size is being reduced from 1,000 shares to 100 with details to be announced by the end of the month. For the retail investor looking to buy Keppel Corp for example that would reduce the minimum outlay to SGD1,081 based on the current price, compared to SGD10,810 it is at present.
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