Opening Address By Mr Lim Hng Kiang, Minister For Health And Second Minister For Finance At The Singapore Exchange Finance Investment Fair 2000 On 8 September 2000 At 9.00 Am At The Singapore International Convention And Exhibition Centre08 Sep 2000
"A BIGGER ROLE FOR INVESTOR EDUCATION"
Distinguished guests, ladies and gentlemen,
I am pleased to be able to join you this morning at the opening of the Singapore Exchange [SGX] Investment Fair 2000.
2 You would all be well aware of the tremendous changes the securities and futures industries are undergoing worldwide. Technology has changed how traditional activities such as stockbroking are conducted, and new distribution channels have emerged. Product innovation has also increased rapidly, catering to ever more sophisticated investors. Both issuers and investors are naturally gravitating towards markets which offer the deepest liquidity and most efficient execution at the lowest cost. Exchanges worldwide have thus been under intense pressure to re-engineer themselves and look for opportunities to distinguish themselves in the competitive landscape.
3 We were among the first few countries to demutualise and merge the Stock Exchange of Singapore (SES) and the Singapore International Monetary Exchange (SIMEX). The integrated Singapore Exchange [SGX] was launched in December last year. Change brings challenges but also offers opportunities and it is good that SGX has responded positively to these opportunities.
4 SGX has been intensively looking at ways to sharpen its competitive edge. It has embarked on three strategies. One, to "bolster" its Singapore-based business; two, to "grow" its business across borders through strategic alliances, and three, to "extend" its business portfolio to diversify the earnings mix.
5 SGX is spearheading product innovation with plans to introduce exchange traded funds and the Indian stock index futures contract, amongst others. On the international front, SGX has been actively pursuing meaningful strategic alliances with overseas partners. These include an agreement with the Australian Stock Exchange to jointly design, develop and establish and active electronic link between the two exchanges' trading and settlement systems; as well as plans to establish a joint venture with the American Stock Exchange to list and trade exchange-traded funds and structured products on SGX. These efforts show SGX's increasing role as a leading exchange in Asia.
6 At home, SGX has also been on an active programme of raising the level of investor awareness. Since 1993 when it was first started, the SGX Investment Fair has grown to become a key event for retail investors. This year, more than 40 thousand people are expected to attend the Fair to acquaint themselves with the new product and service innovations available to them.
7 The issue of raising investor awareness becomes even more pertinent today, in the new environment of caveat emptor. Since 1998, the Monetary Authority of Singapore has been shifting its supervisory approach, from a merit-based regime to a more open disclosure-based one. Enhanced transparency and information flow will allow investors to assess risks better and make their own investment decisions.
8 While the Exchange has a duty to provide a well-regulated, transparent and efficient market for players, the final onus must rest upon investors to keep themselves apprised of the latest market developments and keep abreast with the latest product offerings available. They should understand the fundamentals behind these new instruments, learn how to analyse information and assess risks and valuations. There should be a shift away from the "punters' mentality"in their ventures in the financial markets. Investors must understand that there are different risks associated with different investment instruments. They must learn to tailor their investments to suit their own risk profiles.
9 The SGX Investment Fair is a good platform for market participants to gather and learn the latest investment trends and techniques. I note that SGX has assembled a whole array of industry experts who will be sharing their knowledge on topics such as index futures and exchange-traded funds during the public talks over the weekend.
10 In Singapore, we are pleased that investors have made the first step towards promoting their own interests through the formation of the Securities Investors Association (Singapore). Moving forward, we hope to see investors becoming more proactive in equipping themselves with new investment skills and tools.
11 I am sure you are all anxious to tour the Fair. Ladies and gentlemen, it leaves me great pleasure to open the Investment Fair 2000 and may I wish all of you every success in the years ahead.