How can retail investors benefit from smaller board lots?

The SGX is launching a public campaign.

The minimum lot size in the securities market will be reduced from 1,000 to 100 effective Monday, January 19. To educate retail investors on the benefits of smaller lot sizes, the Singapore Exchange is launching a public information campaign to reach out to encourage more investors to lay their money on the local bourse.

According to the SGX, smaller board lots will make higher-priced stocks to become more affordable to investors. SGX estimates that with the new measure, investors will be able to buy the three largest local bank stocks, for a minimum investment sum of about $5,500, or a mere tenth of the sum required currently.

The measure will let retail investors invest in costlier stocks from the 30 companies which make up the STI. The STI has delivered a 9.5% total return in 2014, above the 10-year average of 8.7% per annum.

Reduced board lots will enable investors with less investment funds to build a diversified portfolio more effectively, giving them more flexibility to manage their exposure to different sectors, while continuing to choose from the more than 800 stocks, REITS and business trusts listed in Singapore.

Apart from the campaign, the SGX is also working with local brokers to encourage their remisiers to engage and better support their clients.

The campaign is supported by OSK-DMG Securities, CIMB Securities, Maybank Kim Eng Securities and OCBC Securities, which will be introducing various promotions for retail investors during this period.