20 August 2013

SGX To Introduce Reduced Lot Size by 2014 - Aug 2013

From 1,000 units to 100.
Singapore Exchange (SGX) is consulting the public on its proposal to reduce the standard board lot size of securities listed on SGX from 1,000 to 100 units, with a view to reducing it to 1 unit in the longer term. The reduction of the board lot size to 100 units as a first step will allow SGX to assess the market impact before unitising the standard board lot.
My View:
I believe this is a brave move for Singapore Stock Exchange to amend the lot size to 100 units from 1,000 units. In my opinion, this will definitely increase the number of shareholders participating in bigger share price companies such as UOB, OCBC, DBS,  and Jardine C&C etc, just to name a few. 
Let's look for the example of Bursa Malaysia that already made the changes some time back, the participation of the younger generation increased, as they may not have larger capital. And it make no sense for portfolio diversification. 
I have some clients who are teenagers may also can take this opportunity to focus on blue chip counters investment instead of trading on penny stocks that may have a bigger volatility risk. The cost for a proper asset allocation may be lower down, as I see some good quality counters have not had share split even though the shares price gone up from few dollars to more than 50 dollars. 
I believe this is a trend resulted by globalization, as younger generation may have more interest on trying out the foreign market, especially US market. If you are not aware of, US market allows investors to trade as low as 1 unit. So the investors can buy the "expensive" counter at 1 unit, such as Berkshire Hathaway. 
Nonetheless, let's wait for a more concrete picture later. 

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