ST Forum : Why investors won't bite yet

Dec 19, 2009
CLOB SAGA AND AFTER...
Why investors won't bite yet

I REFER to Monday's report, 'Singaporeans told: Don't be put off by Clob', on the Malaysian bourse chief calling on investors not to let the 1998 saga deter them from investing in Malaysian companies.

To recap what happened, thousands of Singaporeans who invested in Malaysian shares via Singapore's Central Limit Order Book (Clob) system found their investments abruptly frozen.

In September 1998, Kuala Lumpur banned trading of Malaysian stocks outside the country and imposed widespread capital controls that affected thousands of investors here. This was at the height of the Asian financial crisis.

A few years of insults followed, including one offer to buy out the shares at a mere fraction of their pre-suspension market price which was rebuffed by almost all involved Singaporeans.

Finally, they paid to redeem their own shares which were released to them in instalments instead of in full.

To now tell us not to be put off is no compensation for the insults and financial loss suffered.

Further, under the Clob system, shares were registered in the investors' own names, and investors received annual reports and other announcements as well as dividends, rights and bonus entitlements direct from the companies.

Today, Singaporeans who wish to buy Malaysian shares must do so through Malaysian-based brokers with shares registered in the names of the brokers' nominee companies, which means they receive no annual reports and company announcements.

It is also necessary to hold a ringgit bank account in Malaysia to facilitate payments for purchases and receipt of proceeds of sales.

The bank in Johor Baru I visited to open an account handed me the relevant forms to complete but when I produced my Singapore passport, I was told I could not open an account because of Malaysian exchange control regulations.

Sorry, I must continue to give Malaysian shares a miss until trading becomes as convenient as it is in Singapore, or until they are listed on the Singapore Exchange.

Denis Distant