President’s Message – January 2025

Date: December 31, 2024

Dear members

December proved to be a slightly more difficult month for the local stock market than the few that preceded it, with the Straits Times constantly flirting with the 3,800 level.

As at the time of writing on 29 Dec, the index has gained a modest 32 points or 0.9% for the month at 3,771.63, although it is still 16.4% up for the year.

Perhaps the most notable corporate event in December was SingPost sacking three of its top executives, an event that from a governance perspective is best described as disastrous because it raised numerous, as-yet unanswered questions.

According to the company, the three were asked to leave with immediate effect on 21 Dec because they were found to be “grossly negligent’’ in the handling of internal investigations over a whistle-blower’s report that SingPost had received earlier this year.

The impact on SingPost’s share price was a devastating 10.7% crash on the first trading day after the news was released. The Business Times in an article on 23 Dec titled “SingPost’s Parcelgate fiasco is a corporate governance disaster’’ described what was not in the announcement as “shocking’’.

“Why did SingPost not disclose that it had received a whistleblower’s report, even when internal investigations and an external review and assessment were under way?’’ was one of the questions posed by BT.

SIAS for its part, fired off a list of questions to the company, whilst pointing out that SingPost in its 2024 annual report published at the end of June did not mention receipt of a whistle-blower’s complaint.

“When did the board receive the whistleblowing report, and what safeguards – including additional oversight by the board and temporary curtailment of executive powers of key employees – were put into place during the investigations?” SIAS asked.

Coincidentally, SIAS on 10 Dec had a commentary published in BT “Lessons from the UK Postal Scandal’’ which described the monumental failure of the UK postal service’s board of directors to properly discharge their duties that led to the unfair treatment of thousands of individuals.

In the article, SIAS emphasized the importance of having the right corporate culture and for directors to have the necessary training and accreditation.

SIAS would like to take this opportunity to remind all companies to practice transparency and promptly disclose all material information for the benefit of their shareholders. SingPost is an ongoing story so we will await further developments.

Meanwhile, the US Federal Reserve lowered its interest rates by 25 basis points in December as had been widely expected, but signalled a slower pace of reductions going forward. This took some wind out of the sails of Wall Street, though stocks are still on track to chalk up yet another record-breaking year.

How the US market performs tends to have a profound impact on the local market but much will depend on the economic policies that the incoming Trump administration will implement.

By most reckonings, higher and more tariffs will be inflationary, as will be the threatened mass deportation of illegal workers. Whether or not these will actually take place remains to be seen, though if they do, then a difficult 2025 might lie ahead.

Despite this, investors should rest assured that with the proper knowledge and guidance, there are still plenty of fruitful opportunities to be had.

In this regard, members can look forward to plenty of SIAS events in January. Apart from the usual weekly reviews, we will be conducting two educational sessions online. The first is Mastering Singapore REITs – A Framework for Prudent Selection to Build Passive Income on 8 January, and then Introduction to Fixed Income (Bonds) on 22 Jan.

In between we will host a 14^th Jan Corporate Connect session featuring Japfa Ltd and our regular Ask SIAS on 15 Jan.

I wish you all a Happy and a Prosperous 2025!

 

David Gerald
Founder, President & CEO, SIAS

31 December 2024