Singapore Slammed by China Shares

There are fears that Singapore-listed China companies, known as S-chips, might face difficulties like China-listed companies, which has helped push down the FTSE-ST China index by more than 80% this year. This is definitely one reason the high quality Singapore ETF (EWS) has been hit harder than normal, even with a slowing global economy impacting Singapore's trade-oriented economy.   

Even the best-known S-chips have been hit by selling pressure. Cosco, a shipyard company, and Yanlord (YLDGF.PK), a property developer, are the two worst performers among the 30 stocks included in the Straits Times index (SGX) this year, although analysts say their balance sheets are in good shape. Transparency issues have been a focus of attention since China Aviation Oil (CAOLF.PK), another S-chip, failed to provide timely information on losses stemming from oil derivatives trading in 2005. 

The SGX since then has sought to improve corporate governance and tighten listing procedures for S-chips, which have been crucial to its strategy of expanding beyond its limited source of local listings. About 150 China companies, most of them small and medium-sized businesses, make up nearly a fifth of the 775 listings on the SGX. They are among the most heavily traded stocks by retail investors due to their relatively low prices and interest in tapping into Chinese growth.

Comments

[investor88:]

S chips in Spore slammed down by 80% means they have been bashed a Great Depression size hammer. During the Great Depression the Dow dropped 90%.

Such episodes makes a mockery of the mainstream buy and hold strategy as much as the belief that real estate asset prices can only go up because there is limited land on the planet. Both beliefs if applied blindly can lead to much grief at times.

2008 Oct 23 08:56 AM