Page 59 - Bloomberg Businessweek-October 29, 2018

◼ FINANCE Sh
China Enter the Bear

two—regulation and promotion—work in concert
to create an environment that promotes innova- China’s stock market has plummeted this year, wiping away a
tion while ensuring safety and public confidence.” huge amount of paper wealth. The nation’s shares have lost as
Richard Koh, the chief executive officer much as $3.2 trillion in value since their peak in late January, more
and founder of M-DAQ Pte, recalls a meeting than one and half times the total value of all German stocks.
with Menon and other senior managers of the
monetary authority earlier this year. Menon asked Change in index since Dec. 29, 2017
a few technical questions and jotted down notes S&P 500 Nikkei 225 FTSE 100 DAX Shanghai Composite
as Koh explained how his company is develop- 1 0%
ing multicurrency listing services for securities
exchanges. Then Singapore’s most powerful finan- 0
cial regulator asked the entrepreneur: How can we
help you expand your business? How can we do
better as a regulator? -10
Under Menon, MAS became one of the earli-
est adopters of “regulatory sandboxes” for fin- -20
tech companies, a concept pioneered by the
U.K.’s financial regulator. Fintech companies with
novel ideas are allowed to test their products in -30
a set boundary before fully launching or ditch- 12/29/17 10/24/18
ing them. These startups include insurance bro-
ker PolicyPal, online money changer Thin Margin
Pte, and Kristal Advisors Pte, which uses machine In October—as the Shanghai Composite dropped 7.7 percent—
learning to help investors. the anxiety spread to other markets.
For Kaidi Ruusalepp, CEO of Funderbeam, a Change from Oct. 1 to Oct. 24
funding and trading platform for private companies 35
built on blockchain technology, it’s the balance of -9.2% -8.9% -7.1% -9.3%
openness and MAS’s reputation as a tough regulator S&P 500 Nikkei 225 FTSE 100 DAX
that drew her to relocate to Singapore from Estonia
in August. “Having MAS’s stamp is a big advantage,”
says Ruusalepp, who’s in the process of seeking On top of a slowing Chinese economy
licenses. “There is no way of messing with them.” What’s and the country’s simmering trade war
Some worry that the open approach may lead to Worrying with the U.S., investors fear a cascade
trouble down the road, in the same way that global of forced selling by brokerages dumping
regulators took their eye off the ball in allowing the Investors pledged shares—stock that companies
rapid growth of the exotic products that helped offered as collateral to get loans.
cause the financial crisis. Fintech ventures, being
digital and global, are naturally inclined to locate in
jurisdictions with “light touch” regulations or spe- How Authorities Are Responding
cial concessions, says Satyajit Das, a former banker
and author of several books, including Extreme
Money. “Past experience shows that this can be Oct. 13-14 Oct. 19 Oct. 20 Oct. 21 Oct. 23
problematic,” he says. “This can sometimes store Shenzhen’s On the Shares
up fault lines, which are only revealed later in peri- government weekend after resume their
ods of stress.” promises tens the market’s decline, with
of billions of
biggest one-day
the Shanghai
Menon says he’s aware of the risks. “There are yuan to help Vice Premier advance in President Xi Composite
many examples from our history where we’ve companies that Liu He says the more than two Jinping vows tumbling
have pledged
government
months, the
2.3 percent.
taken bold leaps—bold yet prudent,” he says. “If shares, local wants a healthy, government “unwavering”
support for the
we go purely for innovation, we become a cow- media report. stable market. releases a private sector. That’s even
draft plan
after 11 Chinese
The central

boy town. We think through issues very carefully.” The following bank vows for personal The next day securities
�Yoolim Lee and Chanyaporn Chanjaroen, with Monday, the to support income tax the market companies
agreed to invest
cuts.
Shanghai
companies
Andrea Tan and Stephanie Phang Composite falls issuing debt jumps more in a fund to help
than 4 percent.
1.5 percent, to by helping to ease share-
its lowest since reduce their pledge risks.
THE BOTTOM LINE Singapore’s top financial regulator believes November 2014. credit risk.
he can be uncompromising and still allow for potentially disruptive
fintech startups, aided by the city-state’s “sandboxes.”