Date: July 23, 2011
Mr David Gerald
Friends from the industry
Ladies and Gentlemen
A very good morning to all of you
It gives me great pleasure to see so many of you here this morning, bright and chirpy on a Saturday. Your presence itself, your enthusiasm and your energy this morning is a good omen for our markets.
ASIA SHINES
Today’s markets certainly need plenty of good omens and initiatives. As a result of the problems in the West, chiefly the transatlantic debt crisis and their weak economies, we in Asia are worried about catching a cold and so investors have become more cautious.
But I am inclined to be more positive. Asia continues to experience strong GDP growth rates and is leading the world out of the current slowdown. As a whole, Asia’s economy is expected to exceed the combined economies of the US and EU by 2030, with more than 40 percent of the world’s GDP from less than 30 percent now.
As for Singapore, we are the world’s fourth biggest foreign exchange trading centre with over US$360 billion traded each day. Three of the world’s strongest banks are in Singapore and I am proud to say that they are listed on SGX. Singapore is the world’s Number Two container port in terms of throughput and the Number One centre for the trading of bunker fuel used in shipping.
WHY SINGAPORE
This little Red Dot also continues to post upside surprises.
Our annual GDP, measured in US dollar terms, looks set to overtake that of Hong Kong. In fact, Merrill Lynch says our economy exceeded Hong Kong’s economy by about 10% in the first quarter of this year.
Singapore is also expected to become the world’s top wealth management hub in 2013, beating traditional centres such as London, Switzerland and New York, according to PwC.
So there is every reason for all of us to be smiling this morning. But these are forecasts and we have to, all of us here today, work hard to ensure that we live up to and even exceed these expectations.
To do this, being and staying competitive is very important, which is why the theme of this conference “Stretching Your Dollar” is very relevant. For investors, we know that every cent counts because it is about maximizing return on your savings while managing risk.
Time and time again, investors have called for lower trading costs as one way to improve returns. Now a major cost for investing in exchange-traded securities is the bid/ask spread. And so on 4th of July, we cut what we call the minimum bid size for securities. Bid-ask spreads have narrowed and in some instances, could narrow by as much as 80%. We did some calculations and if we assume the same level of market turnover this year as in last year, the savings for investors like yourselves would be $1.7 billion dollars!
Such initiatives will also help international investors recognize that Singapore is not just attractive as a financial market, but we also offer one of the most competitive trading environments in Asia. As more investors are attracted to our market, they bring along investment capital and contribute to liquidity. It therefore becomes a virtuous cycle, more investment flows, more liquidity, investors will be able to get better prices, and all market participants will benefit, Singapore will benefit!
SINGAPORE – SOMETHING TO BE PROUD OF
Singapore is also recognized as a place where investors can easily access global companies. Forty percent of companies listed on the Singapore market are international companies – this is the highest among global exchanges. We have in Singapore, easy ways to invest or trade in companies like Toyota, Baidu.com, Glencore (this year’s biggest IPO), and indices like Hang Seng and the Nikkei. We are able to offer investors access to the global arena not only via your usual stocks and shares, but also innovative products such as ADRs, structured warrants and many others. And this is we stay competitive – our markets offer investors a diversity of products.
We also work hard to address other needs of our customers. From 1 August, the securities market will trade continuously from 9am to 5pm. You will be able to react to news-flows and manage your exposures throughout the Asian day. You also will have the ability to arbitrage between Singapore and other Asian markets.
This journey towards competitiveness is therefore more than just about cost. Another key competitive advantage Singapore has is that it offers the right environment. This island is unique in that it has long had a history of being at the crossroads between East and West. This was a trading port for hundreds of years and continues to be a major trading and transport hub for anything from crude oil to bulk commodities, to electronics, pharmaceuticals and so on. How did this happen? Part of it is geographic – our location in the heart of Asia, our deepwater port, and so on. Part of it is the good infrastructure Singapore has built: for instance, the port and the airport.
This good infrastructure constantly needs to be improved, and increased in capacity. The financial market is no different. Like our port and airport, our market infrastructure needs to be constantly enhanced and improved. In about 3 weeks, we will host Reach, the world’s fastest engine for matching orders coming into our securities market. Reach will enhance capacity by 10 times to 28,000 orders per second, with an order response time of less than 90 microseconds. (And that’s faster than you can blink your eye!)
Singapore, the world’s fourth biggest forex centre, home to the world’s 3 strongest bank and the world’s No. 2 port, will have the world’s No. 1 trading technology. For all investors, it will mean a more robust market capable of handling more orders. For those investors with more sophisticated ways of trading, the Singapore market with Reach will support their strategies and their methods.
PLANNING AHEAD
At the same time, we are aware of new risks as the market develops. We have, therefore, come up with proposals to ensure that the market remains fair and orderly at all times. SGX is currently consulting the public on circuit breakers, which we think will be a good way to prevent our market from over-reacting and give investors the opportunity to take stock of any volatile situation. We expect to put in place circuit breakers and another risk management initiative – pre-trade risk controls – by next year.
Markets are places where investors invest their savings or capital and where companies can raise capital for their business activities, expansion plans and so on. As the Singapore market rolls out better infrastructure with Reach and other initiatives, there will be more participants. Companies raising capital will be able to reach out to more investors and raise money more efficiently and competitively. Companies, like investors, have strong views about how they would like to do business and how they would like to raise money. We are working hard to meet those demands. Today, companies can do an IPO in Singapore in 6-10 weeks, less than half the time taken in Hong Kong. For those companies which want to issue bonds, we are able to approve boilerplate bond listings within two days from over seven days previously. In the long run, this will draw more companies, more listings, enhancing Singapore as a financial centre.
To improve as a financial centre isn’t always about mega investments like the 250 million dollars we are spending on our Reach technology. It is also about the details, the micro issues. Next week, we will unveil an improved Sgx.com, our website. We are doing this because many customers and investors have come to us to say that finding information on our website is sometimes like looking for the proverbial pot of gold at the end of the rainbow! I see some of you smiling so perhaps we have some of you among us today. We have taken note of all these comments and feedback and I am happy to say we have acted upon them. From Monday, please log on to Sgx.com to see for yourselves what improvements we have made. As always, we welcome your feedback and suggestions. We will also have a Chinese version to our website and a mobile version suitable for all smart phones.
It seems great minds think alike because SIAS is also today launching the SIAS’ Chineselanguage website. I congratulate SIAS for taking this step to cater to an increasingly important group of investors.
Finally, I look forward to working with each and every one of you here to build a more competitive Singapore, a leading financial centre and soon-to-come, the world’s top wealth management centre.
On this note, I declare the Asian Investment Conference and Exhibition 2011 open and I’ll hand you back to my good friend David. Thank you for having me here today and all the best with your conference and your investing experience. Thank you.
