Forty-one companies today enter the Singapore Exchange's (SGX) watch list for the first time under the new 20-cent minimum trading price (MTP) rule - making it 76 mainboard-listed firms in all on the list.
The 41 companies, plus two others that failed to meet financial entry criteria or profitability and market value requirements, will join 33 firms already on the list for breaching financial entry criteria earlier.
Of the 33, 16 also do not comply with the MTP rule, which kicked in on Tuesday, aimed at curbing speculation and market manipulation.
Firms joining the watch list today have three years to lift their six-month volume-weighted average trading price (VWAP) if they were non-compliant with the MTP rule, or boost their financial performance if they breached financial entry criteria. The latter refers to firms incurring three straight years of losses and whose 120-day daily average market value is below $40 million.
So far, 113 companies have undergone share consolidations to meet the MTP rule, of which two have said they wished to do a second round. China Taisan's application was rejected, while A-Sonic's is pending review.
Of 607 mainboard-listed stocks, 126 firms are still trading below the 20-cent six-month VWAP - one-fifth of all mainboard-listed companies. But Mr Chew Sutat, SGX head of equities and fixed income, stressed that these account for only 1.1 per cent of market cap and 1.5 per cent of current turnover The 41 firms account for 0.3 per cent of market cap and 0.4 per cent of turnover, he said.
Meanwhile, the SGX is also allowing 69 companies whose VWAP has fallen below 20 cents - owing to extreme market volatility in January, or after doing share consolidations, or having announced but not yet completed corporate action - until Sept 1 to comply with the MTP rule.
SGX chief regulatory officer Tan Boon Gin flagged a possible merging of the two sets of criteria.
"It may appear clearer and neater to do so. We will need to think through whether it makes sense conceptually and what the implications are... Should a change be considered, we will go to the market to gather feedback through a public consultation," he said.
He said the SGX has clearly labelled which companies are on the watch list over MTP and which are on over financial entry criteria, as well as the different deadlines, given the different cure periods.
SGX head of listing compliance June Sim said: "Companies placed on the watch list should focus on improving their fundamentals and financial performance during this period. Putting these companies on a watch list increases transparency for investors, enabling them to more easily monitor the companies they have invested in."
Securities Investors Association Singapore president and chief executive David Gerald said the watch list "puts an urgency on the companies and investors to act".
"(MTP entrants should) take immediate action to comply with the rule and exit the watch list as soon as possible.
Those that cannot comply should look for new investment, inject new business, and communicate their plans to shareholders. Shareholders should approach the companies they invested in and seek an update on their plans," said Mr Gerald.
Since the watch list's introduction in March 2008, 25 out of 81 entrants have exited successfully. Twenty per cent of the 113 companies that consolidated have seen improvements in their share prices.
