Make equity investing part of nancial planning: SGX

http://www.businesstimes.com.sg/sub/storyprintfriendly/0,45...

B us ne ss T me s - 2 6 M ar 2 01 2 Bu siin es s Tiim es - 26 Ma r 20 12

Make equity investing part of nancial planning: SGX

The exchange will focus on the retail public in its investor education efforts
B y R S VA NIIT HY By R SIIV AN TH Y (SINGAPORE) The Singapore Exchange (SGX) is pushing investor education in a big way in the hope that the retail public will make stock market investing part of nancial planning for retirement. In an interview with BT, SGX executive vice-president Chew Sutat said that the exchange believes there is a need to build an equity investing culture as opposed to the present more speculative orientation. 'In Australia, 43 per cent of their retail market is active and in Hong Kong, the gure is 35 per cent,' said Mr Chew. 'Here, the gure is much lower at 7 per cent. When people retire, they are overweight property, underweight cash and don't have enough to live comfortably. 'This is a problem because with longer life spans, low interest rates and rising ination, people will nd that savings alone or simply speculating in stocks is not enough. You have to have proper nancial planning and in this regard, proactive investment in stocks is one of the key components.' SGX has identied three classes of retail investors: the regular investor who is typically retired, aged 55 and above and who tends to focus only on stocks; the ad-hoc investor who only trades when the market is 'hot' and tends to be prone to the 'herd mentality'; and the young investor aged 18-25 who tends to trade online and is hungry for ideas. For the rst group of regular investors, education would focus on new products and the importance of diversication. For the ad-hoc player, SGX hopes to address the importance of research before investing and a portfolio approach as opposed to short-term punting. For the young investor, the exchange will make as much useful information available online while stressing the importance of risk management. Over the past few months, it has launched several initiatives including the SGX Online Education programme which offers free online courses on Specied Investment Products such as exchange-traded funds and structured warrants, and the My Gateway portal on its website which provides regular sector updates. In addition, SGX has hired external consultants to conduct a survey to determine retail investors' motivations and expectations. 'The challenge is how to actively engage and educate 1.5 million Central Depository (CDP)

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Make equity investing part of nancial planning: SGX

http://www.businesstimes.com.sg/sub/storyprintfriendly/0,45...

holders,' said Mr Chew. 'Back in 2007, we had maybe 40,000 active accounts per day. In December 2011, it sank to a three-year low of 13-14,000.' Encouragingly, the exchange's studies so far suggest that there are no occupational barriers when it comes to investing and the males to females ratio is 1:1. Also, more investors today believe that good investing requires more skill than luck. One possible means of attracting more retail investors back into stocks is to bust certain 'myths' associated with investing, the main one being that real estate makes the best investment said Mr Chew. 'In the past 10 years, the Straits Times Index ETF returned 8-9 per cent including dividends,' said Mr Chew. 'Over the same period, we found that the property index's return was only 5 per cent. The public's fascination with property is not backed by the numbers.' Copyright 2010 Singapore Press Holdings Ltd. All rights reserved.

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