My letter Share Consolidation Not Helpful was published in the ST Forum on 09 Oct 2014.
My original unedited letter is as follows:
The letter by Jimmy Ho (“Price to pay for ‘good-looking’ mainboard” : Oct 7) brings up a good point.
Penny stocks are more prone to speculative activities due to their low market capitalization and lack of institutional interests.
It just happens that many companies with low market capitalization also have low trading prices.
Doing share consolidation to boost their trading price does nothing to change their company fundamentals and market capitalization.
The big move to consolidate shares of those firms who fail to meet the minimum trading price is likely to be nothing more than a feel good exercise.
The best way to curb speculative activity is still the requirement for upfront collateral. The requirement could be higher for companies with a low market capitalization or those listed on the Catalist.