CPF money must not be used to prop up stock market

The suggestion by the Singapore Business Federation (SBF) to use Central Provident Fund money to liven up the "moribund" stock market is a rather appalling one, laden with self-interest ("'Use CPF money to help liven up local stock market'"; yesterday).

The stock market runs in cycles, and when it reaches its peak, large institutional investors liquidate their stock positions to take their profits.

Likewise, many business owners who own shares in their company would seize the opportunity by selling some of their shares.

A "moribund" stock market that follows a nice rise in stock prices suggests that investor interest has waned after a period of intense speculation, apparently because the stock market has reached a place in time where it is unlikely to rise any further and, therefore, the opportunity for the investor to make any further profits has greatly diminished.

Stock investors would be familiar with the maxim, "do not try to catch a falling knife".

I perceive that injecting CPF monies to prop up an ailing local stock market would not only be a futile one (if larger investors are liquidating their stock positions, it is only inevitable that the stock market would further decline), but could also result in steep losses of CPF monies.

Above all, it must be remembered that CPF monies are meant for retirement, and if lost through a poor investment, could lead to individuals going into financial hardship, or even failure.

CPF monies must never be thought of as a means to prop up the stock prices of local companies.

For the SBF to have articulated this reflects rather poor judgment.

Chan Yeow Chuan