Two weekends ago, I was delighted to be invited to a special 50th birthday party for International Banking and Finance (IBF) Singapore, an organisation that has played an integral role in the development of our financial hub.
IBF has reinvented itself as times have changed in the fast-moving financial industry, where billions can move in the blink of an eye.
It started as a dedicated training institute in 1974 — when the city-state had the ambition to be a financial centre but did not possess the local banking expertise required.
By the 1990s, non-banking sectors such as insurance and asset management were covered as growth in these industries required new skills to be acquired and honed.
I moonlighted in the late 90s, earning some extra income teaching Saturday morning classes in securities lending — a business I had the privilege of pioneering in the DBS’s custody business two years into my first job.
In the 2000s, IBF’s mission morphed beyond training into a standard-setting body for financial sector skills and competencies.
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"The IBF standards” — a global first — is now our Skills Framework for Financial Services and plays an important role in promoting work- force and industry transformation, building and mentoring talent pipelines and career fa- cilitation through IBF Careers Connect and job-matching services.
Having been a part of and chairing the Securities and Corporate Finance Workgroup for 10 years and being a member of the Standards Committee before I retired in 2021, it was heartening to hear Deputy Prime Minister Gan Kim Yong, who is also chairman of the Mon- etary Authority of Singapore (MAS), rattle off a series of impressive numbers.
This includes 400,000 individuals trained by IBF courses and at least close to 2,000 financial sector professionals benefiting from IBF’s talent development scheme, which included getting their em- ployers to subsidise overseas training stints to develop their Singapore core.
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After all, this part of the financial sector has faced significant changes as markets, services, customer demand and technology transformed in the last 25 years following 1999’s big bang of deregulation of stock-broking commissions.
Coupled with new competition for the wallets of investors from global asset managers, insurance companies, wealth managers and digital platforms, some participants have struggled, including those who have not adapted and learnt new products and skills to reinvent themselves into financial advisers and private bankers or moved into new career pathways such as buyside analysis, treasury and global markets structuring, or picked up M&A banking or sustainable finance skills from corporate finance IPO managers.
For those who had contributed their time and talent to the industry to serve or mentor others, I was proud to witness the conferment of five new Distinguished Fellows and 27 new Fellows, especially several who are friends.
I was even happier to see 54 promising ITE and polytechnic students taking up IBF Golden Jubilee Scholarships and firms like BlackRock offering full-time roles to polytechnic graduates who have performed well during year-long apprenticeship programmes.
While my time in this industry has set, the challenges and opportunities ahead are not limited to the new fields of AI or Net Zero.
That evening, among the great and the good, including some past legends from the industry I spent 25 years of my life, there was quite a bit of chatter and perennial complaints — but also some optimism about the future of capital markets.
As the work of the Capital Market Committees chugs along, there is some expectation that an ecosystem problem (Chew On This calls this the demand deficit or lack of a sys- tematic process of creating sustained institutional demand) should not be solved by a sin- gle entity, be it the government, MAS or SGX Group.
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A collective problem must be solved by the village, which means getting public and private players to put capital and shoulders to the wheel.
If that happens, one hopes our own retail capital will stop flirting with crypto or overseas markets and bring some of our wallet share back home.
If we want liquidity and IPOs, we must make it happen ourselves.
Surprising Singapore
The local market has not remained idle, even with many naysayers still complaining on the sidelines.
The Straits Times Index (STI) has been on a tear, and the “September surprise” heralded by Chew On This in Issue 1153 (Sept 2) at the start of the month continues unabated.
Meanwhile, global equity markets have been generally stable with declines in US tech even as the rate-cutting cycle by the Fed approaches.
The STI closed 10% higher on Friday the 13th, or 13.7% including dividends, at six-year-high levels.
The long-term annualised return is 5.5%, as worked SGX strategist Geoff Howie calculated.
That is not too shabby for the safe, boring and low-volatility market we are accustomed to.
Data suggest net inflows of up to $700 million have come into our market since the start of the month, perhaps from overseas investors.
If “Seeing is believing” (Issue 1154, Sept 9), that weekly close at 3,562 has excited technical chartists, with some forecasting a 3,800 target.
That will bring it close to our all-time high of 3,870 just before the Global Financial Crisis started rearing its Lehman head in 2008.
With the average directional index (ADX) turning up, supported by positive directional indicators and quarterly momentum, optimists have started to hope, albeit a tad circumspect, as candlestick charts indicate a minor shooting star because of the speed of the accelera- tion — suggesting a pause.
The pause may occur right after the Mid-Autumn party (Issue 1155, Sept 16) because there could be some near-time digestion or indigestion when the market heads into the final week of 3Q2024 after the anticipated Federal Reserve cuts rates.
Having bought and sold my STI ETF position in CPF for a gross 7% return in August, as shared previously, I have now been gradually selling my dollar-cost averaged STI ETF positions (savings for almost 10 years) in my SRS account as the market makes new multi-year highs towards 3,600 this month.
Rinse & repeat
While I am optimistic about the mid-term and that we will eventually break the 2008 record, I hope technical chartists, who foresee some consolidation from here, as well as through my own “spider sense”, that October will be dicey with an unpredictable US election com- ing up on Nov 6.
It does not hurt to take some money off the table, even if it was accumulated over a decade.
After all, “no one ever lost money taking profit” is a maxim I believe in.
The STI index might continue to head towards 3,800 or retreat to 3,400. But like the S&P 500, which is treading water near its highs, the complexion of the stocks that hold it to- gether has changed.
Growth and tech stocks continue to ease while laggards are catching up.
In this regard, stocks that led the rally this time may be due for a pause. This includes our three local stocks and one of our favourites since May, Singapore Telecommunications Z74 (Singtel), whose four-month return has now hit over $1, including dividends or 40%.
Indeed, as the index continues to make new annual highs through September, there have been other breakouts.
When we high- lighted SGX, which was trading at around $9.50, as one to benefit from a period of po- tential market volatility, I was not expecting a sharp rise on Sept 2, when employee shares for this year vest at an auspicious $10.88.
In the second week of September, SGX had even rallied to $11.80 before opening 90 cents low- er on Sept 11 at $10.85 within 15 minutes of market opening.
At $11.80, SGX is still below its high of above $12, just over three years ago, after I retired in July 2021.
But with an increase of 20% in a month, I did a “rinse and recycle” on the shares I had invested in.
It may be a new dawn for our market and the bourse operator, as I had postulated last month.
Although RHB analysts raised its price targets to $11.70 from $10.80 following securities turnover that came in “well ahead” of its analysts’ estimates, JP Morgan and Goldman Sachs downgraded the stock to “underweight” and “sell”, with price targets of $10.50 and $9.90 respectively, on over-optimism about the capital markets review.
No doubt, this is a tactical call following its recent good run.
Irrespective of who is eventually proven correct, the daily volatility and trading range of shares of SGX and how the group is perpet- ually in the news should keep traders happy and volumes up.
Greenshoots have sprouted
Those who know me will know how I hate holding cash in the bank.
Some were quite surprised when they read I had switched some CPF funds, which were profits realised from my STI ETF investment, into one-year fixed deposits with Oversea-Chinese Banking Corp (OCBC), as I foresaw rates declining in July.
After dollar-average selling STI ETFs in my SRS account as the STI broke up, I hope to buy them back cheaper in a consolidation ex- pected in and around the US election.
Some recent proceeds from SGX share sales have been rolled into STI laggards, including Keppel Corp, Sembcorp Industries U96 and even Singapore Post S08 , which have also now start- ed to catch up with ST Engineering, Singtel and the banks continuing to make multi-year highs.
My thesis is that if there is a market pullback, the laggards have a smaller downside. If the market continues to run, they may find their sprinting shoes even in short, sharp spikes that traders love to contra.
This should happen until they settle at higher levels or recover their one-year-high levels.
However, a more certain bet will be rate-sensitive REITs. While we have speculated most recently in July about green shoots in this sector, the REIT index’s break above 640 points last month appears to indicate a 721-point or 15% upside, according to technicians.
It is well on its way.
Long-suffering REIT portfolios (including mine) marked down in some instances by market pricing deep discounts to NAV have started to rebound between 5%– 10% in anticipation of the Fed cut.
In selling growth (SGX), averaging down some decent REIT stocks (which had survived Covid and the Fed rate cycle) and joining the momen- tum in some new ones, I have been carried by the market for now.
As with all recoveries, the direction won’t be one way.
I will use this cycle to jettison out from poorer-performing REITs and switch to other stocks which are more tried and tested.
For this sector, the new dawn has come.
That said, it is probably good to be picky in the still uncertain world out there.
Chew Sutat retired from Singapore Exchange S68 after 14 years as a member of its executive management team. During his watch, the exchange transformed from an Asian gateway into a global multi-asset exchange and he was awarded FOW’s Lifetime Achievement Award. He serves as chairman of the Community Chest Singapore
