The CLOB Saga


Mr Teo

Younger Singaporeans should remember the CLOB saga or they may be clobbered one day.
CLOB stands for Central Limit Order Book.

In the 1990s, the stock market in Singapore was considered small with insufficient volume to cause any excitement.  CLOB was formed to provide a secondary market to trade Malaysian stocks.  This appeared to be a win-win situation for investors on both sides of the causeway.

At its heyday, market value of CLOB shares was between US$15 and $20 billion.  Business was good and everyone was happy.

Then came the Asia financial crisis, Malaysian PM Mahathir and his associates started to accuse Singaporeans of subverting the Malaysian economy.

In September 1998, he banned the trading of CLOB shares without any warning.  When stocks cannot be traded, they are as good as having no value.

180,00 shareholders holding $4.3billion in Malaysian shares listed in CLOB were affected as they were not able to trade their shares.  Some people who borrowed money to buy shares had to sell their houses.
There were offers from Malaysian businessmen who were mainly people associated with PM Mahathir to buy back the CLOB shares but at a 70% discount.

The CLOB saga is over.  Singaporeans who had their fingers or hands burnt will remember Mr Mahathir and his associates.  So will Singaporeans still be buying properties in Malaysia – like the Iskandar project in Johore?  Some gutsy Singaporeans still do.  

Government policies can change anytime and it is usually without notice.