By Lee Su Shyan , ASSISTANT MONEY EDITOR

INVESTORS will not relish being reminded but the FTSE China index is down 48.75 points so far this year - or a drop of 26.2 per cent - which is a heck of a lot of money wiped off investment portfolios.

It has been a steady drumbeat of bad news about S-chips since October, when Ferrochina's problems with paying off its loans surfaced.

For example, China Printing and Dyeing saw its husband-and-wife team run off after the China parent company defaulted on debts. Fibrechem Technologies could not finalise its books. The chief executive of Sino-Environment and the founder of Beauty China pledged their stakes in their companies for personal loans. With margin calls, their shares have to be sold, driving down prices.

You could almost call them Scandal-chips.

So with all this boiling away, it was a disappointment that the Singapore Exchange only asked - but did not require - companies, directors and auditors to keep an eye out for problems.

If they had concerns, the SGX only wanted bosses and directors to investigate and tell investors what was up.

All very chummy but asking companies nicely to pay a bit more attention does run the risk that the ones with dodgy accounts will only drag their feet. By the time auditors or independent directors sound the alarm, it may be too late.

The SGX could have made changes to its listing rules to insist that all companies conduct a check of their cash balances and file a report. That might have given the market the assurance that it is craving for at the moment.

The core issue is that investors are extremely jittery about China companies and, in particular, whether they have the cash in the kitty that they say they have. China Paper illustrates the depth of scepticism out there.

When one analyst asked about its cash reserves, executive chairman Chen Yong apparently said he welcomed investors to go to Linyi (Shandong), where he would have the bank print out a statement for them.

But it seems investors are so worried that they will not be satisfied even with this, with some saying that companies could arrange for the money to be deposited for the checks, only to whip it out the next day.

However, it is unrealistic to expect the SGX to roll out an instant cure-all. Just look at the stimulus packages and monetary policies unleashed by governments and central banks of late. They are hardly overnight solutions.

Investors should try to resist the temptation to seize on the SGX as scapegoat for every failing in the S-chips sector. This is a global economic crisis, so with more than 150 China companies listed in Singapore, it is only natural that some bad apples are going to surface.

And the SGX does not have any legal powers to prosecute companies, unlike the Accounting and Corporate Regulatory Authority, which administers the Companies Act, or the Monetary Authority of Singapore, which handles the Securities and Futures Act. The SGX can only reprimand companies, call for a trading halt or delist them, although those are hefty penalties anyway.

But it also needs to attract companies to list here to boost Singapore's standing as a financial centre, so it cannot swing to the other extreme and take a draconian approach.

Anyway, most companies and directors know the reality of what is happening out there. They know that times are tough and that scandals are around the corner.

Auditors also know that China companies are more risky to audit than local ones - simply because their operations are so far away and the management is also based in China.

But the SGX message is still worth heeding in that it highlights once and for all that irrational exuberance is a thing of the past.

Companies do not need to go all-out to achieve double-digit growth, which in times like these investors will view with a pinch of salt.

So it is a timely reminder for all that it is okay to go back to basics and put one's house in order and focus on the boring stuff like making sure that there is enough cash in the bank.

The flavour of this month - and for a few more to come - is plain vanilla.

This article was first published in The Straits Times.