Will small investors return after years of cold shoulder?

I refer to the letter “Small-cap listed firms should consolidate shares to round number” (March 9).

If history is any guide, the present need to introduce a 20-cent minimum trading price was necessitated by a Frankenstein of the Singapore Exchange’s (SGX) creation.

More than a decade ago, I questioned the wisdom of giving listing approval to initial public offerings, and others, with par values as low as one cent. Many had little investment merit, if at all, and were aimed at retail traders to whom the outlay would be affordable. A high-profile corporate honcho shot down my comment by saying that par values were no longer relevant.

The compelling evidence now is that the chickens have come home to roost and the SGX has been forced to introduce the minimum trading price to rid itself of the Mickey Mouse image that has been built up in consequence.

Ironically, almost on the heels of the announcement, one public-listed company announced a sub-division of its shares in the ratio of 3:1.

Another company has just come out with a rights issue of 8:1, at only one cent, representing “a discount of 57 per cent to the last traded price”.

It remains to be seen if these measures will induce small investors to return in significant numbers after years of being given the cold shoulder while the red carpet was rolled out to welcome institutions and big players.