Money and Finance
I'm sure many people are aware by now of this date. 19 January 2015.
Singapore Exchange (SGX) will reduce the standard board lot size of securities listed on SGX from 1,000 to 100 units from 19 January 2015. A smaller board lot size will make it more affordable for retail investors to invest in a wider range of equities, including blue chips, and enable them to build more balanced and diversified portfolios.
The reduction will apply to ordinary shares, including shares traded on GlobalQuote, real estate investment trusts, business trusts, company warrants, structured warrants and extended settlement contracts. Existing counters with board lot sizes of 100 or less units will remain unchanged.The board lot sizes for exchange traded funds - except for SPDR Straits Times Index (STI) ETF and ABF Singapore Index Bond Fund for which the board lot size will be reduced to 100 units - American Depositary Receipts and fixed income instruments, including retail bonds, Singapore Government Securities and preference shares will remain unchanged.
What does this means for Investors? More shares will become accessible as their prices drop. For example, 1 lot of Starhub costs $4,100 for 1000 shares. From 19 January 2015, the price would be $410 for 100 shares, which is impossible to do so now.
However, what can we expect? More people will rush to buy shares. Will the share price rise?
After all, when learning Economics in Business, I learned that naturally when demand increases, price increases as well. Might not be good news for newbie investors who have not enough capital.
However, no point thinking so much! After all, as long as nothing is confirmed, it's essentially
After all, this move to decrease board lots have been talked about since 2013. The plans to introduce in the first quarter of 2014 never happened, as we all know.
See this article in 2013: http://sbr.com.sg/markets-investing/news/see-why-sgx-planning-reduce-board-lot-size
What are your strategies? From a few financial blogs, I gathered that some are preparing their funds to purchase REITs, various Banks as well as stocks basically.
What do I feel about this? The drop in board lot may mean more investors can join in. But at what cost?
Let me try and paint a scenario:
Investor A has been purchasing Stock X at $3/share at 1000 shares / lot.
So he invests $3000 each time he buys 1 board lot.
Come 19 Jan 2015, if the stock prices doesn't change. Everything's good. Right?
Investor A still invests either $300 for 100 shares or $3000 for 1000 shares. Doesn't make a difference.
Ah, but what if the share price changes? Maybe now it's $4 or even $5 per share.
Essentially, it's still relatively affordable right? Since it costs $400 - $500 for 1 lot of 100 shares.
Investor B is happy. He can now purchase Stock X at $400 compared to $3000.
Is Investor A happy? He now pays $4000-5000 if he wants to purchase 1000 shares.
My point is, buying in bulk may not be as cheap compared to the past for Investor A. Investor B is happy because he can now invest in a more affordable way.
So, this is how the change in board lot will affect various categories of Investors. It's not as dramatic a change as most people in the general public assume.
What about me? It might be beneficial for me as I have access to more stocks with the decreased board lot. But ETFs are not really affected, so it may not affect me as much as others.
Signing off,
Teenage Investor
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Money and Finance
The Reductions in Board Lot. What It Means and Should It Affect You?
I'm sure many people are aware by now of this date. 19 January 2015.
Singapore Exchange (SGX) will reduce the standard board lot size of securities listed on SGX from 1,000 to 100 units from 19 January 2015. A smaller board lot size will make it more affordable for retail investors to invest in a wider range of equities, including blue chips, and enable them to build more balanced and diversified portfolios.
The reduction will apply to ordinary shares, including shares traded on GlobalQuote, real estate investment trusts, business trusts, company warrants, structured warrants and extended settlement contracts. Existing counters with board lot sizes of 100 or less units will remain unchanged.The board lot sizes for exchange traded funds - except for SPDR Straits Times Index (STI) ETF and ABF Singapore Index Bond Fund for which the board lot size will be reduced to 100 units - American Depositary Receipts and fixed income instruments, including retail bonds, Singapore Government Securities and preference shares will remain unchanged.
However, what can we expect? More people will rush to buy shares. Will the share price rise?
After all, when learning Economics in Business, I learned that naturally when demand increases, price increases as well. Might not be good news for newbie investors who have not enough capital.
However, no point thinking so much! After all, as long as nothing is confirmed, it's essentially
"No Man's Land"
After all, this move to decrease board lots have been talked about since 2013. The plans to introduce in the first quarter of 2014 never happened, as we all know.
See this article in 2013: http://sbr.com.sg/markets-investing/news/see-why-sgx-planning-reduce-board-lot-size
What are your strategies? From a few financial blogs, I gathered that some are preparing their funds to purchase REITs, various Banks as well as stocks basically.
What do I feel about this? The drop in board lot may mean more investors can join in. But at what cost?
Let me try and paint a scenario:
Investor A has been purchasing Stock X at $3/share at 1000 shares / lot.
So he invests $3000 each time he buys 1 board lot.
Come 19 Jan 2015, if the stock prices doesn't change. Everything's good. Right?
Investor A still invests either $300 for 100 shares or $3000 for 1000 shares. Doesn't make a difference.
Ah, but what if the share price changes? Maybe now it's $4 or even $5 per share.
Essentially, it's still relatively affordable right? Since it costs $400 - $500 for 1 lot of 100 shares.
Investor B is happy. He can now purchase Stock X at $400 compared to $3000.
Is Investor A happy? He now pays $4000-5000 if he wants to purchase 1000 shares.
My point is, buying in bulk may not be as cheap compared to the past for Investor A. Investor B is happy because he can now invest in a more affordable way.
So, this is how the change in board lot will affect various categories of Investors. It's not as dramatic a change as most people in the general public assume.
What about me? It might be beneficial for me as I have access to more stocks with the decreased board lot. But ETFs are not really affected, so it may not affect me as much as others.
Signing off,
Teenage Investor
- Berkshire Hathaway Buys Back $1.2 Billion Of Class A Stock
With the share repurchase ceiling increased to 120% of book value, Berkshire can now buy back A shares up to a little over $134,000 per share, and B shares up to a little over $89 per share. Berkshire Hathaway Inc (BRK-A) spent $1.2 billion buying back...
- Berkshire Hathaway Authorizes Repurchase Program
OMAHA, Neb.--(BUSINESS WIRE)-- Berkshire Hathaway Inc. (NYSE:BRK.A - News)—Our Board of Directors has authorized Berkshire Hathaway to repurchase Class A and Class B shares of Berkshire at prices no higher than a 10% premium over the then-current book...
- How To Invest In The Stock Market With Just $100 Every Month?
As passive investors, many of us including myself invest regularly on a monthly basis. Additionally, some of us are investing for long term goals that includes retirement. However, how much can most of us afford to invest every month? The numbers may...
- Investing Without Your Parent's Knowledge?
I received another email from a reader named Peishi. It goes as follows. Hey there! :)I am turning 17 in 2015.Would you advise starters like me to save up for 1 lot of Nikko AM, or STI ETF for passive investment?Also, I read off from your blog...
- How To Invest In Shares [part 2]
Hi, welcome to Part 2 of How to Invest In Shares :) Hopefully, Part 1 was relatively beneficial with around 200+ views so far. Well, today I would be touching more on the returns of Investing! Why do we want to invest in shares? Because historically,...