SINGAPORE, Nov 4 — Singapore Exchange Ltd Chief Executive Officer Loh Boon Chye says his top priority is to restore confidence in Southeast Asia’s biggest stock market, where turnover has yet to recover from a mystery penny-stock crash more than two years ago.

Since taking the helm in July, Loh has been handling “to-do lists” from investors, brokers and listed companies who want him to revive interest in equities, he said in an interview this week. Loh’s predecessor Magnus Bocker drew criticism for focusing on his derivatives business while investors and stockbrokers suffered an unexplained freefall in three commodity companies in 2013 that wiped out US$6.9 billion (RM29.4 billion) in market value.

“I like challenges,” said Loh, a banker who used to run Asia-Pacific global markets for Bank of America Corp. Even though the penny-stock slump happened well before his tenure, he’s so aware of the fallout that he has an acronym to describe it: ABL, the initials of the companies that plunged. “These are things that are out there and that clearly has a dent on confidence in trading. We need to overcome that.”

Trading slump

The value of shares traded in Singapore has increased 11 per cent to a daily average of S$1.16 billion (RM3.5 billion) this year from the same period of 2014 as the exchange allowed trading in smaller chunks to attract individual investors. That’s still about 25 per cent lower than in 2013 before the penny-stock crash. Partly because of the trading lull, companies have looked elsewhere to list. SGX hosted seven initial public offerings worth S$103.9 million in the quarter through September, down from S$1.9 billion a year earlier.

“Singapore is a small city-state so it’s never going to be up there with Wall Street or Shanghai,” said Shane Oliver, Sydney-based global strategist at AMP Capital Investors Ltd, which manages about US$112 billion. “It’s making sure that the country remains innovative, corporate governance remains high and capital can flow freely. That will keep investors on its side over time.”

Loh, 51, says SGX is working on a bond-trading platform that will make it a more attractive place for companies to raise money. The facility will allow companies to sell bonds in smaller amounts instead of “multi-hundred million” dollars each time, he said.

Getting liquidity

“This was really designed with a steering group — buy side, sell side, existing banks,” Loh said. “It’s better to have a system to now be embraced by the users, then you have a greater chance of getting the liquidity.”

Loh also plans to add currency products and last month started a customised index service in a move to help diversify SGX’s revenue. Derivatives and equities accounted for 41 per cent and 25 per cent of its most recent quarterly revenue.

“If you want to talk about scale, that’s clearly one of our challenges,” Loh said. “There’s a broader value proposition. Yes, we would like more IPOs but fund raising is also about debt.”

Securities-fraud investigation

Banks and brokers have sued to recover at least US$230 million from the stock rout which led to the city’s largest securities-fraud probe. The investigation continues and authorities have said they’re “sparing no effort” to identify any culprits.

Bocker, who led SGX for more than five years, didn’t seek to extend his contract. A petition signed by more than 500 people sought to remove him as chief. SGX shares slipped 0.4 per cent during his tenure, while the benchmark Straits Times Index advanced 21 per cent. Since Loh started, the exchange operator’s shares have fallen 9.1 per cent and the equity gauge has dropped 8.2 per cent. Analysts tracked by Bloomberg are the most bullish on the stock since 2011.

“I hope to make a difference. It’s a high-profile job, I get that,” Loh said, adding that he’s a very private person. “I walked into this job knowing that.” — Bloomberg