THE 200 most traded stocks in Singapore have contributed almost all the S$1.1 billion in average daily turnover (ADT) for the local market in the 2024 year to Jul 24.
ADT simply represents the total trading value for the stock over a period, divided by the number of trading days for the period. This provides an averaged measure of the market’s activity level.
Thus, a key caveat, along with any form of averaging, is that the ADT can be skewed higher due to a one-off or a few trading sessions that have seen soaring volumes, corresponding with a surge in trading value.
Soilbuild
For instance, on Jun 14, Soilbuild Construction Group saw 68,830,800 shares change hands at an average price of S$0.083.
This generated trading turnover of S$5.7 million for the session and propelled the stock from ranking among the 500 most traded stocks for the year by ADT, to the 200 most traded stocks for the year.
Since the end of February, the counter had maintained a return-on-equity ratio of 23 per cent, after the group reported a net profit of S$7.3 million for its FY23 (ended Dec 31), compared to a net loss of about S$31.7 million for FY22.
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However, it was Soilbuild’s announcement that it had secured a construction contract worth S$647.5 million, propelling its order book to surpass S$1.2 billion for the first time, that created the surge in ADT on Jun 14. The announcement also took the price-to-book ratio of the stock from 6.9x to 17.1x.
The group is expected to report its H1FY24 results by Aug 12.
While Soilbuild’s market capitalisation currently sits at just over S$130 million, the concentration in the local market trading activity to the 200 most traded stocks would appear to be largely due to the higher market capitalisation of the 200 stocks.
This is on the back of simple economics. For example, purchasing a 0.1 per cent stake in a company priced at S$1 per share with a S$1 billion market capitalisation would cost S$1 million, while the same stake in a S$50 million company also priced at S$1 per share would cost S$50,000, excluding transaction costs.
As it currently stands, the combined market capitalisation of the top 200 traded stocks in the local market is about 25 times larger than that of the next 200 most traded stocks.
Soilbuild is not the only exception among the 200 most traded stocks with a comparatively smaller market capitalisation.
More than 40 stocks that presently rank outside the largest 200 Singapore-listed stocks by market capitalisation have ranked among the 200 stocks that have seen the most ADT in the 2024 year to Jul 24.
For instance, Chasen Holdings maintains a market capitalisation of S$37 million as at Jul 24, ranking it outside the 350 largest stocks by market capitalisation, but with its ADT of S$978,030 for the 2024 year to Jul 24, it ranks among Singapore’s 75 most traded stocks for the period.
20 stocks with highest ADT
Looking at the 20 stocks within the 200 that have seen the biggest percentage increase in ADT compared to 2023, as many as nine come from the stocks with comparatively smaller market capitalisation.
These include Global Invacom Group, GSS Energy, Jasper Investments, Chasen Holdings, Aspen (Group) Holdings, Beng Kuang Marine, Oiltek International, Broadway Industrial Group and Soilbuild Construction Group.
Two of these stocks are listed on Catalist while another two are also on the SGX-ST watch list under the financial entry criterion.
Returns of the 20 tabled stocks have also been mixed, with the nine smaller capitalised stocks generating median total returns of 122 per cent over the 2024 year to Jul 24, while the remaining 11 larger capitalised stocks generated median total returns of 43 per cent.
As shown in the table, Global Invacom Group maintains the smallest market capitalisation of the 200 most traded stocks with the biggest percentage increase in ADT.
The group had a market capitalisation of S$11 million as at Jul 24, with its ADT in 2024 to Jul 24 at more than S$200,000.
The ADT has been consistent over the year with the fully integrated satellite ground network equipment provider ranking among the 110 most traded stocks by ADT in Q1 2024, and 115 most traded for the 2024 year to Jul 24.
The stock was placed on the SGX watch list due to the financial entry criterion with effect from Jun 5, 2024. In FY23 (ended Dec 31), the group experienced a net loss of US$1 million.
This was a significant improvement from the US$15.5 million net loss in FY22, with the negative margin reducing to 1.5 per cent from 21.3 per cent.
The group also noted that throughout FY23, it continued to secure contracts with top-tier companies in the satellite ground equipment industry, reinforcing its status as a key player through innovative technology and solutions.
It added that despite sector and internal challenges, its commitment to the strategic review initiated in Q3 FY22 has led to significant operational efficiencies and cost savings, especially in the US manufacturing subsidiary.
These efforts, along with profits from the sale of manufacturing equipment, greatly improved the net loss position for its FY23, bolstering its investment capacity in the satellite communications sector.
Small-cap stocks
These examples underscore some decoupling of ADT from market capitalisation, with small-cap stocks such as Soilbuild, Chasen Holdings and Global Invacom Group driving significant market activity.
This trend highlights the dynamic nature of the Singapore stock market and the potential for growth and investment in sectors beyond the traditional large-cap domains.
The writer is market strategist at the Singapore Exchange (SGX). To read SGX’s market research reports, visit sgx.com/research
