http://www.facebook.com/ChenShowMao#!/notes/chen-show-mao/free-market/203537246378210
Free Market
by Chen Show Mao on Thursday, September 22, 2011 at 8:28am
I was glad to learn that the football club Manchester United will soon be offering its shares in Singapore. Glad for the club, which I'm sure could use more cash, but mostly for Singapore.
The news also drew reactions from Hong Kong, where the club had apparently abandoned its earlier plans for a similar offering, in favor of the Singapore stock market. A column in the South China Morning Post called SGX, the Singapore Stock Exchange, a "cowboy market" with "pretty low standards", for letting through the offering, part of which will be of non-voting preference shares. "A respectable exchange does not accept shareholding structures that undermine the voting rights of the investing public." Similar concerns are echoed by some Man U supporters.
I hope all this furor will serve to focus the attention of potential investors on the specific terms of the shares that they will be buying (i.e. no voting rights among other things). The information flow will help the (Singapore) stock market work better when the offering comes around. But I think the criticism is misplaced.
Some Man U fans may distrust the Glazers and do not wish to see them further entrench themselves at the club with a share offering, particularly one in which shares with no voting rights will be sold, in effect enabling the Glazers to raise cash without conceding the proportionate amount of control. But that is a different issue from how good the Singapore stock market is in serving the interests of its participants. As long as the investors have easy access to information on what they are buying (Watch out!), the fact that the Singapore stock market offers them more choices (i.e. you can pay less for your shares by skipping the voting rights) makes Singapore a better market for them, not worse. In this case, in addition to the customary disclosure requirements, publicity of the long-drawn green-and-gold anti-Glazer protests could only have helped to sound the alarm "Buyer Beware" to potential investors (many of them fans). In the "democracy" of the listed companies, shareholders can easily vote with their feet and many choose to. They prefer exit to voice and simply sell the shares or demand a lower price before buying.
There are many reasons why some majority shareholders and management feel strongly about issuing shares with different voting rights. Some may indeed, as the SCMP column suggests, wish to steal from the listed company (I wouldn't know as much as the experts from Hong Kong). But others have offered rationales relating to company performance that seem to sit well with investors. Many "respectable" folks have fiddled with different voting rights for different classes of shares: Google, Warren Buffett, Her Majesty's Government in the British privatizations. Stock exchanges in the United States and elsewhere permit the listing of different classes of common shares with different voting rights, as well as the listing of different securities such as common shares and preference shares with different voting rights.
Singapore has little to apologize for in offering up to the world a free market.
Free Market
by Chen Show Mao on Thursday, September 22, 2011 at 8:28am
I was glad to learn that the football club Manchester United will soon be offering its shares in Singapore. Glad for the club, which I'm sure could use more cash, but mostly for Singapore.
The news also drew reactions from Hong Kong, where the club had apparently abandoned its earlier plans for a similar offering, in favor of the Singapore stock market. A column in the South China Morning Post called SGX, the Singapore Stock Exchange, a "cowboy market" with "pretty low standards", for letting through the offering, part of which will be of non-voting preference shares. "A respectable exchange does not accept shareholding structures that undermine the voting rights of the investing public." Similar concerns are echoed by some Man U supporters.
I hope all this furor will serve to focus the attention of potential investors on the specific terms of the shares that they will be buying (i.e. no voting rights among other things). The information flow will help the (Singapore) stock market work better when the offering comes around. But I think the criticism is misplaced.
Some Man U fans may distrust the Glazers and do not wish to see them further entrench themselves at the club with a share offering, particularly one in which shares with no voting rights will be sold, in effect enabling the Glazers to raise cash without conceding the proportionate amount of control. But that is a different issue from how good the Singapore stock market is in serving the interests of its participants. As long as the investors have easy access to information on what they are buying (Watch out!), the fact that the Singapore stock market offers them more choices (i.e. you can pay less for your shares by skipping the voting rights) makes Singapore a better market for them, not worse. In this case, in addition to the customary disclosure requirements, publicity of the long-drawn green-and-gold anti-Glazer protests could only have helped to sound the alarm "Buyer Beware" to potential investors (many of them fans). In the "democracy" of the listed companies, shareholders can easily vote with their feet and many choose to. They prefer exit to voice and simply sell the shares or demand a lower price before buying.
There are many reasons why some majority shareholders and management feel strongly about issuing shares with different voting rights. Some may indeed, as the SCMP column suggests, wish to steal from the listed company (I wouldn't know as much as the experts from Hong Kong). But others have offered rationales relating to company performance that seem to sit well with investors. Many "respectable" folks have fiddled with different voting rights for different classes of shares: Google, Warren Buffett, Her Majesty's Government in the British privatizations. Stock exchanges in the United States and elsewhere permit the listing of different classes of common shares with different voting rights, as well as the listing of different securities such as common shares and preference shares with different voting rights.
Singapore has little to apologize for in offering up to the world a free market.
Last edited:
