SINGAPORE (Sept 20): It wasn’t long after The Edge Singapore was launched that I began measuring time not in days or months but in terms of the publication’s issue numbers, a consequence of constantly thinking about stories and commentaries that were to run in upcoming issues. Whenever people asked how long I had worked for this newspaper, I would simply tell them how many issues had been published since we began, and leave it to them to work it out.

As this is our 900th issue, and the last issue to which I will contribute as an employee, I did the math myself for once: It has been almost 18 years since I joined The Edge Singapore and stumbled into an exciting and hugely satisfying career in business and financial journalism.

Now, looking back on our reporting, it is remarkable to me how much things have changed. When our first issue rolled off the presses in March 2002, Singapore’s skyline did not yet include the iconic Marina Bay Sands integrated resort and Marina Bay Financial Centre. Good Class Bungalows could be purchased for as little as $5 million. The city state’s public transport system had an unblemished reputation. And, “foreign talent” was not the pejorative term it has become.

More importantly, the lens through which we viewed corporate news was unashamedly oriented towards capital markets. As we saw it, companies existed only to serve their shareholders, and anything that lifted their earnings and boosted their stock prices was deemed to be positive. We had great faith in markets as an organising force for everything.

This attitude served our readers well at the time. After the Asian financial crisis of 1997/8 and the dotcom bust of 2000, it was an opportune moment to invest in stocks and property. Singapore had begun developing new growth drivers and was reducing its traditional reliance on manufacturing and transport. It set out to attract the best human capital from around the globe to gain footholds in new, high-value industries.

In particular, Singapore liberalised its financial services industry to become a global force in private banking and wealth management. It also overcame its long-standing aversion to casinos, licensing two of them as part of a plan to turn itself into a major destination in the global MICE (meetings, incentives, conferences and exhibitions) business. As these plans were put into action, the economy as well as asset prices boomed.

Then, in 2008, the global financial crisis struck. The US Federal Reserve and other major central banks responded with unprecedented monetary policy action. Long story short, a much-feared deflationary spiral was averted and a recovery of sorts unfolded. But the whole episode deepened divisions in developed economies, where inequality had been growing for decades. The result has been a political blowback that is reversing globalisation and has sparked a trade war between the two largest economies in the world.

In the meantime, there is a growing sense that the world has not been served well by every company that has delivered massive returns to investors. Soaring stock prices do not reflect progress on social mobility or equality or the environment. In fact, inequality and environmental degradation, and unemployment caused by the upending of traditional industries, are often presented as worthwhile trade-offs for economic progress and rising incomes.

If companies are to continue being effective in creating shareholder value, they need to stave off the growing risk of heightened regulation by addressing the “negative externalities” they create. It could lead to more complicated relationships with all their stakeholders, their shareholders not least among them. Consequently, the manner in which newspapers such as The Edge Singapore report on the corporate sector and financial markets will have to change dramatically.

Fake news, fake companies

In 2012, when shares in Facebook fell below US$20, only three months after an IPO at US$38, I decided to take a chance on it. There was no other company in the world like it, and I was certain that it was on the brink of making an enormous amount of money in ways I could not yet imagine.

Of course, I did not know the half of it at the time. Facebook is now widely seen as a major conduit for the distribution of “fake news”, and had apparently been a tool of Russian meddling in the US presidential election of 2016. But shareholders of Facebook aren’t any more accountable for this than shareholders of the British East India Company — the first limited liability company in history — were accountable for the injustices it perpetrated in India four centuries ago.

Even if I had known in 2012 what I now know about Facebook, I would still have bought the stock when it slumped below US$20. Moreover, I would probably have held on to the stock longer. I sold my Facebook shares in 2015, as they galloped past the US$100 mark. Since then, I have watched the stock continue climbing. It shot past the US$200 mark for the first time last year. It was trading at about US$188 last week.

The point I am making is that people invest in stocks for only one reason — they want to make money. They do not care if the company in which they are invested makes shoes, cultivates oil palm trees or operates shipyards. The market also does not particularly care if a company is well behaved, as long as any bad behaviour does not adversely affect its capacity to generate profits. For instance, Keppel Corp has been quite unscathed after it said in 2017 that it would pay US$422 million in fines for its part in a bribery scandal in Brazil.

Some investors might not even care if a company has a real business, as long its stock price rises. Blumont Group, LionGold Corp and Asiasons Capital (now Attilan Group) garnered a lot of interest among investors before collapsing suddenly in October 2013. In the immediate aftermath of the crash, some market watchers wanted to know why The Edge Singapore was not looking into how cheap those stocks had apparently become.

Since then, we have learnt that most of the trading volume in these counters before the crash had been generated by a network of brokerage accounts controlled by Malaysian wheeler-dealer John Soh Chee Wen and his alleged girlfriend Quah Su-Ling. We also know that some of the brokerage accounts used were opened as far back as 2008, and that the players behind the operation had used shares in LionGold and Asiasons, among others, as collateral for borrowings as far back as 2010.

New opportunities?

Scandals such as the penny stock crash and the Keppel bribery case aren’t going to make it easier to reignite investor enthusiasm in the local stock market. But they aren’t the underlying cause of the current apathy.

As I noted in this column two weeks ago, the sad fact is that promising new companies all over the world simply do not need small-time public investors as much as they once did. With an abundance of capital available in the private market, these companies have been able to gain enormous scale well before even contemplating a public listing. And, when they do go public, it often feels like much of their value has already been realised.

This past week, WeWork owner The We Company postponed plans for an IPO amid questions about the sustainability of its business model and its governance practices. The company had reportedly been valued at about US$47 billion ($64.7 billion) in January, when it received a US$2 billion cash injection from SoftBank Group Corp. Yet, it had not been able to win over public investors for its IPO, even at reported valuations of only US$10 billion to US$12 billion.

Other supposedly disruptive companies that have managed to list recently have not performed all that well. Music streaming service provider Spotify Technology hit the public market in April last year through a “direct listing”. The stock ended its first trading day at US$149.01, nearly 13% above the reference price of US$132. It shot past US$190 four months later. But it has tumbled since then. The stock was trading below US$128 this past week. Then, there is ride-hailing player Uber Technologies. Its stock has mostly traded below its IPO price of US$45 since its listing in May. The stock was trading at about US$34 this past week.

No doubt, these companies are continuing to evolve. They may well adjust their business models in unexpected ways, and transform their prospects. So, I am not suggesting that investors write them off. At the moment, however, they seem much less exciting to me than Facebook was in 2012.

Back in Singapore, the lack of interest in the local market is going to raise the stakes for regulators as well as corporate boards. As the middle class in developed countries clamours for more inclusiveness, minority investors here want to see listed companies run for their benefit. For analysts and financial journalists continuing to cover the local stock market and corporate sector, that represents an interesting opportunity.

High-quality reporting on whether minority investors are getting a fair shake in takeover offers and delisting exercises would be far more useful than the usual handwringing about Singapore’s losing its position as a key regional capital-raising centre. The recommendations of professional advisers should be closely scrutinised, even as directors are ultimately held accountable. The media could also provide small-time investors with useful information on how to vote in their own best interests at shareholder meetings, and ensure a strong turnout at these events.

We should also begin a serious conversation about sustainability issues — and I am not referring to palm oil companies and the extent to which any of them might be contributing to the current haze. For instance, property developers should be pushed to explain their thinking on land scarcity and housing costs, as well as the ongoing technological disruption faced by many businesses that occupy their commercial properties. The telecommunications companies should be grilled about their strategies to cope with advancing technology and the shifting communication habits of their customers, especially in the light of the huge underperformance of their shares in recent years.

Investors might buy stocks only to make money, but I am convinced that they will recognise and appreciate the value of analysis, context and insight from the media.