• print
  • email
  • twitter

The Pan-Electric crisis hits the stock market Dec 1985

On 30 November 1985, beleaguered Pan-Electric Industries Limited, a marine salvage, hotel and property group, collapsed and was placed in receivership after having amassed huge debts of S$453 million owed to 35 banks and S$160 million worth of unfulfilled forward contracts.[1] The company’s stocks were popular with trading houses and small investors,[2] and at the time of the crisis, the value of outstanding forward transactions in the market was estimated to be at S$140 million.[3]

The company’s collapse resulted in the closure of the Singapore and Kuala Lumpur stock exchanges from 2 to 4 December 1985 in order to contain the fallout on heavily leveraged stockbroking firms.[4] This marked the first and only time that the Singapore stock exchange had closed due to a trading emergency.[5] The move sent shock waves across markets in the region.[6] Share prices plummeted, investor confidence was shaken and Singapore’s image as a financial centre took a beating.[7]

The Pan-Electric crisis led to a tightening of the regulatory framework on securities. It paved the way for new regulations to be introduced, including amendments to the Securities Industry Act. The act provided a framework to regulate the stockbroking industry, curb share speculation, and institute greater transparency in reporting by listed companies.[8]

References
1. Monetary Authority of Singapore. (2004, June). Case study on Pan-Electric crisis. (pp. 11, 15). MAS Staff Paper, No. 32.  Retrieved September 3, 2013, from MAS website: http://www.mas.gov.sg/about-mas/monographs-and-information-papers/staff-papers/2004/~/media/resource/publications/staff_papers/MAS_Staff_Paper_No32_Jul_2004.ashx; The Pan-Electric crisis. (1985, December 3). The Straits Times, p. 23. Retrieved from NewspaperSG.
2. Ong, C. C. (1985, December 8). How trouble started – and the small man got hurt. The Sunday Times, p. 11. Retrieved September 3, 2013, from NewspaperSG.
3. Singapore. Parliament. Parliamentary Debates: Official Report. (1986, January 10). Pan-Electric Industries Ltd (Forward contracts) (Vol. 46, cols. 677–680). Retrieved September 3, 2013, from Parliament of Singapore website: http://sprs.parl.gov.sg/search/report.jsp?currentPubID=00069499-ZZ
4. Monetary Authority of Singapore, Jun 2004, p. 12.
5. Monetary Authority of Singapore, Jun 2004, p. 9.
6. Sandhu, K. S., & Wheatley, P. (Eds.) (1989). Management of success: The moulding of modern Singapore (p. 906). Singapore: Institute of Southeast Asian Studies. Call no.: RSING 959.57 MAN-[HIS].
7. Ong, C. C. (1985, December 4). MAS chief fields the queries on a debacle. The Straits Times, p. 23. Retrieved from NewspaperSG; Monetary Authority of Singapore, Jun 2004, p. 48.
8. Monetary Authority of Singapore, Jun 2004, p. i; Lee, S.-Y. (1990). The monetary and banking development of Singapore and Malaysia (p. 94). Singapore University Press. Call no.: RSING 332.095957 LEE.

 

The information in this article is valid as at 2013 and correct as far as we are able to ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.

Next Event Prev Event