MENU

Singapore’s Worst Shares over the Past Decade

I was on a taxi ride once when the amicable taxi driver asked me what I did for a living. When I told him I work in the investment industry, writing and commenting on the share market for The Motley Fool Singapore, he remarked that shares were incredibly complicated creatures for him.

That’s certainly not how I feel, however. In fact, when the share market is distilled down to its simplest, it works in an easily-understood manner that’s succinctly described in a quote attributed to billionaire investor Warren Buffett: “If the business does well, the stock eventually follows.” And since that’s what I believe in, I naturally shared that titbit of information with the driver.

Why shares can earn big returns

Between the start of January 2004 and June 2014, shares like Ezion Holdings (SGX: 5ME), and MTQ Corporation (SGX: M05) were amongst the top 10 best-performing shares in Singapore with four-digit percentage total returns (where gains from reinvested dividends are accounted for) of 4,734% and 1,190% respectively. They were living examples of Buffett’s quote as along the way, their per-share profits had also grown by some 1,671% and 838%.

Why shares can lose by big amounts

Now, here’s an interesting thing. The following two tables deal with Singapore’s 10 worst shares over the past decade. The first showcases their returns while the second logs their corporate performance. Can you spot any link between the two tables?

Share

Price: 1 Jan 2004*

Price: 1 June 2004

% Change

Surface Mount Technology (Holdings)
(SGX: Q7Q)

S$13.55

S$0.019

-99.9%

Metech International
(SGX: QG1)

S$2.488

S$0.014

-99.4%

Digiland International

S$0.14

S$0.001

-99.3%

Infinio Group

S$1.417

S$0.012

-99.2%

Advanced Systems Automation

S$0.814

S$0.009

-98.9%

Elektromotive Group

S$1.42

S$0.018

-98.7%

Charisma Energy Services

S$3.011

S$0.051

-98.3%

LH Group

S$0.323

S$0.006

-98.2%

Huan Hsin Holdings

S$1.00

S$0.02

-98.0%

Next-Generation Satellite Communications

S$0.077

S$0.002

-97.4%

*Prices on 1 Jan 2004 are adjusted for dividends, stock splits, rights issues, and spin-offs

Source: S&P Capital IQ

Share

EPS: 1 Jan 2004*

EPS: 1 June 2014*

Surface Mount Technology (Holdings)

146

0.57

Metech International

30.7

0.003

Digiland International

-15.1

0

Infinio Group

-6.77

0

Advanced Systems Automation

-182

-0.117

Elektromotive Group

-31.4

-0.28

Charisma Energy Services

-37.6

-0.003

LH Group

-12.4

0.047

Huan Hsin Holdings

9.04

-20.8

Next-Generation Satellite Communications

0.43

-0.03

*EPS = earnings per share; figures are denominated in Singapore cents

Source: S&P Capital IQ

With the broader market, as represented by the Straits Times Index (SGX: ^STI), having gained 87% to 3,296 points in the same time frame, an investment into those 10 shares would have been a really painful experience for investors.

It’s also easy to tell from the second table how Singapore’s worst shares had either: 1) Seen their earnings shrink beyond recognition; or 2) had huge problems just trying to make a profit.

Turns out, the reverse of Buffett’s quote is often true as well: Over the long-term, if the business doesn’t do well, its stock would eventually follow too. You simply cannot do well over the long-term in the share market if the underlying businesses of your shares perform poorly. That’s the link between the two tables and is something we need to keep in mind when we invest.

Click here now for your FREE subscription to Take Stock Singapore, The Motley Fool's free investing newsletter. Written by David Kuo, Take Stock Singapore tells you exactly what's happening in today's markets, and shows how you can GROW your wealth in the years ahead.  

The Motley Fool's purpose is to help the world invest, better. Like us on Facebook  to keep up-to-date with our latest news and articles.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing doesn’t own shares in any companies mentioned.