It seems like Singapore Business leaders wish to have more government action to flood the market with CPF account holders’ money to prop up the sluggish STI. It is kind of funny when international investors are not interested in pumping money into our local market and these Business leaders who most of them should be CEOs of local listed companies want the government to be the money supplier. Will this be posing more risk to the CPF account holders bearing in mind that this is supposed to be a retirement account and any investment should generate a long term stable return for the holders. The money should not be use to support the local stock market just because it is currently not attractive to the international investors or maybe to a certain extend, local investors.
We believe this kind of thinking is unfair to the commoners. Lets hope the government will not be risking the hard earn monies of the account holders.
The Valumetrics Team
Business leaders want to separate CPF from investment limits.
Major local business leaders are calling for workers’ Central Provident Fund (CPF) to be used to revive Singapore’s “moribund” stock market.
A position paper by the Singapore Business Federation (SBF) noted that the local stock market has lagged behind the country’s growth as a major financial centre. In 2012, the market capitalisation plummeted to 142% of GDP from 2005’s market capitalisation of 248%, making Singapore significantly less attractive as a listing venue.
“The Government should consider separating the CPF component and managing it differently as how pension funds are managed. This will free these funds from the GIC investment restrictions and will likely result in some investments in the Singapore market. These investments will send strong signals on our market to other investment professionals,” the position paper asserted.
The paper also noted that the way the CPF funds eventually flow back into the local market will serve as a barometer of local bourse Singapore Exchange’s efforts to make the flagging market more attractive.
Further, the growth of local companies allow for a furthered scope to develop other market platforms “to address the gap between Catalist and the SGX Mainboard.” This would thereby attract companies with stable performances but are relatively moderate in size.
“These companies will find comfort amongst their peers and will not have to fight with the other classes of companies for market attention. As we widen the investor pool, this additional platform can differentiate the listed companies for more targeted attention by investors,” the paper stated.
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