Singapore Exchange Ltd.’s new chief executive officer Loh Boon Chye faces the challenge of reviving stock trading on Southeast Asia’s biggest bourse as volume growth lags behind Hong Kong.
Loh, 51, will start at SGX on July 14, taking over from Magnus Bocker, the exchange said in a regulatory filing Monday. Bocker, 53, will step down at the end of this month after a 5 1/2-year tenure. Loh was formerly Bank of America Corp.’s head of Asia Pacific global markets.
Loh will lead SGX as it seeks to boost lacklustre equity-trading volume, attract more share sales and fend off competition from international rivals expanding in the city-state. While Bocker helped develop the exchange’s derivatives unit, he also presided over a failed bid for Australia’s bourse operator and two outages that disrupted trading in 2014. SGX shares gained less than 1 percent since Bocker’s arrival in December 2009 through yesterday as the Straits Times Index climbed 22 percent.
“The biggest challenge for the new CEO is how to revive trading in the stock market,” Bernard Aw, a strategist at IG Ltd. in Singapore, said by phone. “They also need to improve their infrastructure to prevent future outages. The trading disruptions last year is really damaging to their reputation.”
SGX shares gained 0.4 percent to S$7.96 as of 3:07 p.m. in Singapore trading. That took its advance this year to 1.9 percent, compared with a 1.7 percent decline in the benchmark gauge.
Average daily turnover on the Singapore bourse rose about 4 percent to S$1.2 billion ($887 million) this year through Monday from a year earlier, according to data compiled by Bloomberg. That compares with Hong Kong, where trading almost doubled to $15.8 billion.
“In a rapidly evolving financial landscape, SGX has to adapt to stay ahead and I look forward to working with the stellar team towards this goal,” Loh, who had a 26-year career in the financial industry after getting his engineering degree from the National University of Singapore, said in the statement.
Singapore’s stock trading activity is still down from the daily average of S$1.5 billion before investors deserted the market after an unexplained $6.9 billion plunge in the value of three commodity companies over three days in October 2013. SGX has been growing its derivatives business, with revenue jumping 52 percent in the quarter ending March 31 as volumes on the FTSE China A-50 Index futures surged.
There’s been a dearth of initial public offerings in the island republic, with only three companies listing so far this year and raising a combined $41 million, down from $721 million a year earlier. While SGX has been successful in attracting listings from real estate investment trusts and energy-related companies, these industries have been out of favor recently, according to Credit Suisse Group AG.
“This is not something that anyone has any control over,” Arjan Van Veen, a Hong Kong-based analyst at Credit Suisse Group AG, said by phone. “The biggest single thing that they can do is continue the structural changes in the equity market. These reforms should lead to higher volumes over the next couple of years.”
As part of efforts to restore investor confidence, SGX cut the standard lot size for equity transactions to 100 shares from 1,000 and required companies on the bourse’s mainboard to have a minimum price of S$0.20 to discourage speculative trading in low-priced shares.
Loh sits on the board of Singapore’s sovereign wealth fund GIC Pte and was a director of the city-state’s stock exchange for almost a decade through 2012. He joined Bank of America in 2012 from Deutsche Bank AG.
Bocker received a bonus of S$2 million in 2014, taking his total remuneration for the year to S$3.78 million, according to the SGX annual report. He received S$4.1 million the year before.
(This story was earlier corrected to remove an extraneous word in the third paragraph.)