MAS needs to boost retail share of IPO listings

It would be fairer to retail investors and add to market liquidity given the larger pool of shareholders

I REFER to the commentary “It’s sink or swim time for local small and mid-cap stocks” (BT Sep 10).

The Monetary Authority of Singapore’s (MAS) Equity Market Development Plan (EQDP) to boost small and mid-cap stocks needs further review so retail investors can benefit.

MAS needs to look into how small and medium-sized listing candidates allocate their placement vs retail tranches.

For some time now, most of these flotations focus on placement shares, leaving just a small portion for retail investors.

In MetaOptics’ case, all 30 million shares on offer were placed out. Lum Chang Creation offered only one million shares to retail investors out of 49 million while InfoTech did slightly better with 5 million offered to the public out of a total of almost 25 million shares.

This may explain why the recent small cap IPOs have enjoyed price spikes upon listing as retail investors who failed to get their hands on the small number of public offer shares scrambled to pick them up on the open market.

MAS could mandate that at least 40 per cent of IPO shares should be reserved for the public to qualify for the EQDP. This would be fairer to retail investors and add to market liquidity given the larger pool of shareholders.

Francis Cheng