MAS-led review group needs to speed up efforts amid flurry of delistings and dearth of IPOs
SINGAPORE – Speed and coordination are of the essence as a review group set up to help strengthen Singapore's stock market makes some headway.
Formed in August 2024, the review group will continue to be helmed by Mr Chee Hong Tat, who is now Minister for National Development in Singapore's new Cabinet , after relinquishing his previous roles as Minister for Transport and Second Minister for Finance.
In a May 21 Facebook post, Mr Chee also said he will remain as deputy chairman of the Monetary Authority of Singapore (MAS) to support Deputy Prime Minister and MAS chairman Gan Kim Yong, and will continue to work closely with the central bank and tripartite partners to grow Singapore's financial sector.
This helps to provide continuity in the tough task ahead as there is some urgency in reviving the local stock market, which is struggling with a sharp decline in initial public offerings and a fast-growing number of delistings. Competition from other exchanges in the US and Hong Kong has also intensified, with some Singapore-based companies opting to list there instead.
To be sure, initial measures introduced by the review group in February have made progress: A programme to allocate $5 billion in seed capital to Singapore-based funds for investing in local stocks has received positive interest, with suitable fund managers to be shortlisted by end-September, MAS told The Straits Times.
Meanwhile, tax incentives have been rolled out, and public consultations on proposed changes to listing rules and securities regulations are under way to simplify disclosure requirements for companies intending to pursue IPOs.
Trading activity on the Singapore Exchange (SGX) has improved, with almost 29.5 billion shares worth around $41 billion traded in April, up from around 26.8 billion shares valued at $29.6 billion traded in March, according to the exchange.
Still, progress updates on some of the other measures announced in February are still in the works.
These include equity investments through a global investors programme that allows eligible foreign investors to obtain permanent residency in Singapore in exchange for substantial investments.
First introduced by the Economic Development Board (EDB) as one of the investment options under the programme in March 2020, the family office option is intended to draw family office principals to invest in Singapore.
The requirements included having a Singapore-based single family office (SFO) with minimum assets under management (AUM) of $200 million, of which at least $50 million must be deployed into selected investment categories here.
According to the EDB, as at end-2024, it had approved 40 applicants under this option.
Since the review group's first measures were announced in February, new family office applicants with $200 million in AUM applying under this option have been required to invest $50 million in Singapore-listed equities only.
However, ST was unable to get further data on how much has been deployed into Singapore equities since then.
An EDB spokesperson noted though, that SFOs under the programme 'constitute only a small segment of the broader family office ecosystem in Singapore'.
Still, a May 23 UBS family office report noted that family offices globally are showing more interest in the stock markets.
'Developed market equities, such as SGX stocks, are the favoured asset class for family offices globally and in the Asia-Pacific (Apac) for the next five years,' said Mr L. H. Koh , head of UBS global family and institutional wealth in Apac.
The review group is also expected to announce the expansion of an existing research grant scheme to broaden analyst coverage of mid- and small-cap stocks and research dissemination through new media channels.
This is expected to support more informed decisions among investors, even as disclosure requirements for issuers are eased.
As at November 2024, the research grant had added 14 research firms and supported more than 1,100 research reports covering over 170 SGX-listed companies, MAS said.
When asked if any investor protection measures, particularly for minority investors, are also being considered as Singapore moves towards a disclosure-based system to encourage more listings, an MAS spokesperson noted that the review group has recommended adopting a more pro-enterprise regulatory stance alongside measures to strengthen investor confidence.
'MAS will be studying ways to strengthen investor protection through enhancing investor recourse avenues.'
On this front, market watchers have suggested setting up an institution to financially assist retail investors who are victims of market misconduct, fraud or scams in instituting class actions against, and to recover damages from, errant persons or companies that are responsible for losses suffered.
These avenues, along with introducing programmes to uplift listed companies' shareholder engagement capabilities and attracting retail liquidity through reducing board lot sizes, are among a second set of measures expected by the end of 2025.
Analysts at Morgan Stanley noted in a May 22 report that the second set of measures could include initiatives to improve corporate value, governance, and capital efficiency – similar to those introduced in Japan and South Korea - which they believe could significantly boost investor interest.
'With multiple potential catalysts ahead, valuations are likely to edge even higher,' they said.
Whatever the case, for the stock market to be liquid and successful, all revival measures – including those aimed at restoring confidence and trust – must be well-coordinated and executed in tandem to be effective.
Timely implementation is critical to ensure the Singapore market remains relevant.
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