Forum: Bonus issues and stock splits would make trading more affordable too
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The Singapore Exchange’s (SGX) proposal to reduce standard board lot sizes is a welcome move that lowers the entry barrier for retail investors, especially younger ones with limited capital ( SGX proposes reducing lot sizes to make trading more affordable, such as for younger people
However, board lot reform alone may not go far enough.
Another effective – and arguably more impactful – approach lies with listed companies themselves: bonus issues and stock splits. While smaller board lots make trading technically easier, high share prices can still feel daunting to retail investors. A $35 or $40 stock remains psychologically expensive even if one can buy it in smaller lots.
Take DBS Bank and UOB as examples. Both are well-run, globally respected banks with strong fundamentals and loyal investor followings. Yet their relatively high share prices can deter smaller retail investors, particularly younger ones starting their investment journey. A bonus issue or stock split would not change the intrinsic value of these banks, but it would improve affordability, liquidity and market participation.
Such practices are common in major markets like the US and Hong Kong, where companies actively manage share prices to remain investable. In Singapore, however, many fundamentally strong counters continue to trade at price levels that discourage broad retail ownership.
Encouraging companies – especially blue-chip leaders – to consider bonus issues or stock splits would complement SGX’s board lot reforms. A two-pronged approach, combining regulatory initiatives with proactive corporate action, could help revitalise retail participation and enhance the overall vibrancy of the local equity market.
Goy Soong Ngee
