Wolf Money(portfolio update end Feb 2025)part 1

 

(Image credit: Business Times)

Licensing of finfluencers 

In a recent parliament sitting, the topic of licensing finfluencers for their work was mentioned. There are downside risks to such regulations. These are my point of views. The increase regulation on anything will have an impact on the industry that is being regulated. I have no sympathy for those finfluencers playing the pump and dump game by trying to influence the outcome of the stock price. In my observation, most finfluencers are providing contents that are of a reasonable basis because if one is talking nonsense without due processes, the channel wouldn’t take off. Of course, I wouldn’t go into detail whether they are good or bad advice. At least in my observation, most followers of financial channels on social media are consuming those videos for entertainment and knowledge. There are also viewers who have already been sold on a certain financial products or stocks that are mainly seeking confirmation to their own entrenched biases. Most investors I come across are skeptical about free advice from the internet. Very few people will take advice at face value without any pinch of salt.

The downside of those licensing requirements can have an impact on already weak sentiment towards the Singapore market. In a recent report, there is a declining interest in the Singapore stock market among local gen alpha investors. Even if the authority is not looking to curb freedom of expression, it is counter productive as it might have unintended consequences of limiting free flowing of ideas. The finfluencers might be fearful of been taken to task and not speak with ease. Given MAS effort trying to revive our stock market and the weak sentiment towards our market especially the non bank stocks. We need more people to talk about our stock market, not more regulations. The licensing requirements might open a pandora box for other social media influencers. 

For example, should a property agent recommending certain property which resulted in the buyer losing money be taken to task? Should financial course service providers be sanctioned for selling trading software which resulted in losses for the users? Or MLM schemes that work as a kind of get-rich-quick scheme be banned on social media? Or should a food vlogger be punished for recommendation which resulted in mass food poisoning? Or a Fengshui master be told to shut down due to some bad fengshui advice on social media? The list can go on.

Do the authorities want to spread their resources thinly on those minor issues? The authority needs to cater manpower for licensing those finfluencers and many more positions to enforce. Furthermore, it was mentioned in the parliament that very few complaints were flagged out to the authorities over the past 5 years about finfluencers. Less than 5 complaints per year to be exact. It is a low number given the number of social media postings.

The best way to regulate is to educate the public on the notion of “buyer beware”. Leaving the industry alone might be the best way forward. Previously, did the authorities try to regulate bicycles by mandating bicycle plates in the 70s? How did it went? It did nothing.

Stocks, like food, are subjective. There is no good or bad advice. An investor can buy the worst stock and make big money. In the same breath, one can lose a ton of money by buying stock in a great company. With MAS changing direction to a disclosure regime for our stock market in yesterday policy shift. Taking a light touch approach on finfluencers is the correct application for an aspiring stock market. Protecting minority shareholders against rogue companies that display a flagrant disregard for listing rules should be the number one priority on hand for the authorities. Food for thought. God bless.🙏

Part 2 coming up…..

*As usual no malice in my commentary.

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