A STUDY OF THE S.E.S. SECOND BOARD

Abstract

The second board of the Stock Exchange of Singapore, SESDAQ (Stock Exchange of Singapore Dealings and Automated Quotation System), was introduced in February 1987. It was launched with the blessings of the financial authorities in Singapore. A study on the development of SESDAQ would be of interests to the financial community. This academic exercise is an attempt to assess and study the development of the second board in the period between February 1987 to June 1990. In Chapter one, the rationale for the introduction of the second-tier and third-tier stock markets is analysed . The Singapore's case for a second board is then presented. Chapter two deals with the structure of the SESDAQ market. Matters concerning listing requirements, methods of entry and the evolution of the trading system in SESOAQ are discussed in comparison with that of the Mainboard. The assessment of the financial community's response to SESOAQ is done in chapter three. Analysis on the share price movement of SESDAQ stocks and the volume-turnover in the SESDAQ market are made to assess the investors' interests on SESDAQ stocks. Analysis on the number of listings, and the expansion of the SESDAQ market in terms of paid-up capital and market capitalisation, a:-e then made to assess the business community's willingness to utilize the second board to obtain equity finance. The results of the study also indicate to a certain extent, the proficiency of the SESDAQ committee. Chapter four discussed the methodology of measuring price performance of SESDAQ stocks, relative to that of the Mainboard. The theoretical background together with empirical tests done on various stock markets are summarised and assessed. Findings of the research are summarised in Chapter five. The research essentially tries to answer the following questions: is it worth investing in the SESOAQ market with the Mainboard stocks as the alternative? Which are the SESDAQ stocks to pick? Some problems faced by the second board together with some recommendations and suggestions are discussed in Chapter six. The chapter ends with some concluding remarks regarding the future development and prospect of the second board.