29 companies added to SGX Watch-list
27 firms didn’t meet revised MTP rule, 2 failed financial entry criteria
Twenty-seven companies were added to the Singapore Exchange (SGX) Watch-list Monday (June 5) for failing to meet the revised minimum trading price (MTP) rule.
That makes 78 mainboard-listed companies in all on the list - representing about 10 per cent of all companies listed on the SGX.
All up, 29 companies entered the list yesterday under the regulator's first review since the MTP rule was tweaked last December. This included two firms that failed to meet separate financial entry criteria based on profitability rules.
The MTP framework, which took effect in March last year with a 20-cent minimum trading price for mainboard-listed companies, was intended to highlight to investors those stocks that may be more susceptible to excessive speculation and potential manipulation.
But the 20-cent MTP rule drew fierce criticism from many who saw companies lose millions in market value after being forced to undertake share consolidations.
Some of these companies did so without fixing their underlying problems - which resulted in prices plunging again.
In response to feedback, the SGX relaxed the MTP rule in December so that a mainboard-listed company that maintains a six-month average daily market capitalisation of over $40 million will not be put on the list even if it misses the 20-cent MTP requirement.
The revised MTP criteria have been a boon for two companies, which exited the list yesterday under the latest assessment.
Drilling rig owner Jasper Investments and petroleum exploration and production firm Interra Resources said they had been removed from the list. But the number of companies on the list has not fallen.
Mr Leon Yee, a lawyer and independent director of Federal International, which was one of over 100 issuers that previously resorted to share consolidations to meet the MTP, said: "There is a mismatch between financial performance and share price performance in Singapore, because of the low liquidity of our market. As the years go by, more companies will go on the Watch-list, because there is only so much liquidity to go around.
"Until now, the regulator is still stuck on this. The fact of the matter is it is not working out for issuers."
Companies on the list must give quarterly updates on their financial situation and have three years to meet the MTP or financial criteria. Otherwise, they face a delisting.
Meanwhile, those hoping for more tweaks to the MTP rule have reason to stay optimistic.
In April, Professor Tan Cheng Han, the new chairman of RegCo, which is taking over all of SGX's regulatory functions, declared that he would not be afraid to reassess sacred cows in the rules framework.