MAS and SGX announced a joint statement on some changes coming our way when it comes to share trading:
To improve retail investors’ access to a broader range of listed securities, particularly blue-chip stocks, SGX will reduce the board lot size for securities listed on SGX from the existing 1,000 shares to 100 shares in January 2015. SGX will announce details of this initiative by end-August 2014.
I can see this good for those that wants to invest in:
- DBS: $18.31
- Jardine Matheson: $59.04
- Jardine Strategic: $35.55
- SGX: $7.17
- UOB: $23.18
- OCBC: $9.92
- STI ETF: $3.37
If its 1 lot (1000 shares), investors used to need:
- DBS: $18310
- Jardine Matheson: $59040
- Jardine Strategic: $35550
- SGX: $7170
- UOB: $23180
- OCBC: $9920
- STI ETF: $3370
It is out of reach for many investors. And if you want a sound diversified portfolio, you will need a larger wealth funding
If its 1 lot (100 shares), investors used to need:
- DBS: $1831
- Jardine Matheson: $5904
- Jardine Strategic: $3555
- SGX: $717
- UOB: $2318
- OCBC: $992
- STI ETF: $337
That looks much more manageable. I wonder if liquidity will improve for these stocks.
To keep costs manageable, you cannot purchase 1 lot of Singapore Shipping at $0.25 cents for a total amount of $25.
Your total commissions are usually $29 minimum for most brokerages. Your commission is more than the shares you purchase. Its a different proposition if its using Standard Chartered Online trading, since they do not have a minimum commission.
So they charge 0.25% per transaction. Your 1 lot of Singapore Shipping commission will cost $0.0625 instead of $29.
This would mean that you can slowly collect your favourite companies, little by little.
I wonder if they will keep that minimum. I think they will. Their business is not just on SGX but on numerous other exchanges as well. There are many that would still purchase in the size of $5k, $10k, regardless of this, because they have conviction in their purchase (or because they are willing to bet big)
One real advantage is that now you can pair the SPDR STI ETF with SCB online trading, if you channel > $350 into wealth building.
You can monthly purchase the STI ETF, dollar cost averaging in (although i see no difference accumulating quarterly or yearly and then buying the ETF in a lump sum yearly). Gives more power to the small investor. This is much lower cost than if you rely on auto plans like POSB Invest Saver