Local retail investors are eager to get in on the action as well. According to SGX, retail investors accounted for $2.62 billion in net inflows to local stocks, the highest level since 2020.
“I hope this positive momentum continues, but we know markets have ups and downs. Our focus, therefore, must be to continue strengthening the competitiveness and attractiveness of our ecosystem,” Chee Hong Tat, National Development Minister and deputy chairman of the MAS, told Parliament on Feb 3. He was responding to an adjournment motion from Workers’ Party Members of Parliament Louis Chua and Jamus Lim on what else can be done to bolster the local stock market.
Chee is right to strike a cautiously optimistic tone. The rally that began in 2024 is promising, but it could just as easily stall if the global economy turns sour. That said, there is one potential pitfall policymakers could do more to mitigate before it undermines the review group’s gains.
Revitalising a sleepy stock market isn’t rocket science. It’s a confidence game, where regulators, exchanges, investors and listed companies feed off one another’s momentum. Confidence begets capital and that’s how the trading and investment flywheel keeps spinning.
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There is, however, a flip side to the animal spirits described by the economist John Maynard Keynes. Retail investors who are only keen on making a quick buck through speculation and opportunistic trades might find themselves on the losing end when markets shift, as they always do.
Now that the domestic stock market is waking up, investor education must be a top priority. Retail investors need to understand the fundamentals of investing. This can range from being able to differentiate between stocks and REITs to developing a habit of following the news about companies they hold shares in. We do not want a situation where people see the stock market as a get-rich-quick scheme with no risks.
Both the public and private sectors have launched initiatives to educate retail investors. The MAS oversees MoneySense, a national financial education programme, while MoneyOwl — an online financial literacy platform owned by Temasek’s philanthropic arm — provides financial advice and investment recommendations.
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The problem now isn’t a lack of resources. It’s a lack of awareness. Ask yourself: had you heard of MoneySense or MoneyOwl before reading this column? The MAS and SGX-led Equity Market Implementation Committee may want to explore how these programmes can be consolidated to better serve retail investors.
A single platform that delivers financial and investment advice in bite-sized chunks would help ensure retail investors are playing the market and not being played by it. Talks and roadshows could also be targeted at schools to instil the right principles and habits early on.
Chee closed his Feb 3 parliamentary speech by acknowledging that the work of “developing a vibrant equities market is not a one-off campaign” but a “multi-year effort.” Educating retail investors must be part of that work, too.
