Flash back to several years ago, when Hyflux first went Initial Public Offering. Then, Hyflux was feted. Singapore was proud that it has turned its Achilles heels in water resources into an expertise that Singapore was ready to export to the world. The founder of Hyflux, Ms Olivia Lum has since become synonymous with water in Singapore and was seen as the poster child of Singapore’s water industry. But with the development of Hyflux now, it seems that investors who had invested into Water see their monies evaporated figuratively and literally into Water Vapour.
What had happened to Hyflux, a former popular and seemingly resilient Singapore’s stocks should be taken seriously by the investment fraternity here. For it was not too long ago, that some government-linked companies which were formerly well-known also underperformed and were taken off SGX. Think Tiger Airways, think NOL and perhaps also SMRT. And then there is Noble Group and its developments not too long ago. Noble Group, which though was not a government-linked listed company, was a top commodity trading stock before but is now reduced to a more modest stock.
Hence if there is a lesson to be learned from Singapore investors, it is that there is no one safe stock in this current dynamic macro environment and that there is no assurance that stocks which were perceived to be solid would continue to be so. And there is also no guarantee that “blue-chip” stocks would continue to be “blue-chip” stocks. In fact, some of the blue-chip stocks are now trading at fractions of what they traded in their hey-days: think Sembcorp Industries and Sembcorp Marine as examples. Basically, the current macro backdrop and environment for these blue-chip stocks have changed such that what worked in the past had to be constantly improved upon so as to stay ahead of the company’s peers in the world.
Away from the larger blue-chip stocks, investors into Singapore stocks markets need also be selective. As examples, Singapore stocks markets experienced before very lacklustre performance from the so-called S-chips (the latest being Midas Holdings stock). Then there was the penny stocks saga in Oct 2013 of which the details of what really transpired are not known even till today. In addition, Singapore stocks markets has also attracted very few listings on SGX and conversely, quite a number of listed companies had exited SGX. In fact, Bloomberg this week published an article which noted the shrinking Singapore stocks markets.
In a nutshell, my message for investors into Singapore stocks is to be discerning and know that there is no more safe Singapore stock anymore, reason being, Singapore has passed the stage of industrialization and rapid development. And Singapore is a small stock market such that the local market here is already very saturated and businesses venturing overseas would inevitably take some risks competing with others for a larger market. Singapore’s listed businesses are entering into a whole new business landscape marked by technological disruptions and geo-political changes not seen before.
In light of the above, it is not Businesss-As-Usual for investors into Singapore stocks: do not expect the Singapore stock that you are holding will always be doing well in today’s world! Join the emailing list to receive regular Financial and Singapore stocks newsletters too! Like" me on Singapore Stocks Investing Facebook page to receive all posts on your Facebook as well as read more articles. Follow me on Twitter too.
