- POSTED: 17 Dec 2013 23:21
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Investor professionals in Singapore are most critical of a lack of ethical culture within financial firms.
SINGAPORE: Market fraud has emerged as a top concern to investment professionals in Singapore.
According to a global survey by CFA Institute, there is greater optimism worldwide over economic prospects next year.
However, investor professionals in Singapore are most critical of a lack of ethical culture within financial firms. There are also strong concerns over a property bubble in the local market.
The sell-down of penny stock counters in October stunned investors and resulted in market fraud being highlighted as a major ethical issue by almost one-third of Singapore investment professionals surveyed.
They have called for more action to be taken to address the lack of trust.
Almost half of the survey respondents called for top management and executives to establish and encourage better culture within their firms, while almost one-quarter said regulators need to ensure improved corporate governance practices.
"If investors don't have confidence in the capital markets, then they're going to avoid it, and that's going to be negative for Singapore capital markets. Effectively, more needs to be done in terms of higher standards and inculcating better ethical behavior,” said CFA Society Singapore board member Daryl Liew.
“Regulators need to work with the private sector to work out what is necessary and what is best. A lot of guidance can be taken from best practices globally.
"Learning from best practices on a global basis, seeing what needs to be tailored to the local market per se -- all these things need to be done to ensure investor confidence remains in the capital markets," he added.
However, some market participants have expressed concerns over the prospect of tighter rules and point out that enforcement measures must be in place to ensure regulations are effective.
Financial Alliance managing director Vincent Ee said: "We don't want to over-regulate. Regulations have to be practical as well. Cost is a concern. Whenever compliance and new regulations come into effect, businesses, companies and financial institutions will have to increase the compliance headcount and improve on systems.
“Regulations have to come with some enforcement action as well. Regulators must make sure all these rules are enforced, otherwise their objectives will not be met."
Meanwhile, the survey also reveals growing concern over the prospect of a property bubble in Singapore.
Mr Liew said: "Moving forward into 2014, we could see a bit of a bursting of that bubble there. We could see potentially prices start to come down. We're already starting to see rents start to soften. That could be an early sign that we could see a bit of the bursting of the property bubble here in Singapore."
Going forward, political instability in emerging markets is seen as the biggest risk to Asia Pacific economies. Growth rates in emerging markets have also been identified a major concern among Singapore investment professionals.