Latest news with #EquityMarketDevelopmentProgramme
Business Times
3 hours ago
- Business
- Business Times
As plans to revitalise SGX spur liquidity, companies should prioritise shareholder value and accountability
THE national effort to revitalise the local market kicked into a higher gear last week, with the Monetary Authority of Singapore (MAS) announcing the appointment of the first batch of fund managers under its S$5 billion Equity Market Development Programme (EQDP). MAS said on Monday (Jul 21) that it will place a combined initial sum of S$1.1 billion with Avanda Investment Management, Fullerton Fund Management, and JP Morgan Asset Management. Participants in the EQDP are expected to focus on the mid-cap and small-cap segment of the market, and pursue fund strategies that improve liquidity and broaden investor participation. The next phase of fund manager selection under the EQDP is expected to be announced by the fourth quarter of 2025. MAS also said last week that S$50 million has been set aside to enhance the Grant for Equity Market Singapore (Gems) scheme, to support new listings and strengthen the equities research ecosystem. In addition, MAS outlined plans to better enable investors to seek recourse if they suffer losses due to market misconduct. Not surprisingly, these moves reinforced the already bullish sentiment in the market. The Straits Times Index ended last week more than 1.7 per cent higher – led by DFI Retail Group, which climbed 13.1 per cent on news of a bumper dividend payout. Other big gainers included property counters such as CapitaLand Investment (up 3.3 per cent), City Developments (up 8.1 per cent) and UOL Group (up 2.8 per cent). BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up ST Engineering, the best-performing component of the STI so far this year, was up 5.6 per cent last week amid reports of continued contract wins. Among the banks, DBS was up 4.4 per cent while UOB rose 0.4 per cent. OCBC slipped nearly 0.9 per cent. There was also a surge of interest last week in non-STI stocks that analysts expect will be pursued by fund management firms that receive EQDP funds. For instance, Maybank's list of 'potential EQDP beneficiaries' included: AEM (up 11.7 per cent), ComfortDelGro (up 13.1 per cent), Food Empire (up 8.4 per cent), Frencken Group (up 15.2 per cent), iFast (up 5.1 per cent), Nanofilm Technologies (up 17.3 per cent), Sheng Siong (up 2.9 per cent), and UMS Integration (up 4.8 per cent). Given this positive reaction, it seems to me that the EQDP could be a potent driver of the Singapore market in the months ahead. In fact, if the funds under EQDP are made available to small investors, I might invest some of my own money in them. Prioritise shareholder value There are, of course, lots of reasons to worry that liquidity created by the EQDP in the smaller-cap segment of the market will ultimately prove to be fleeting. For one thing, some of the complementary supply-side initiatives to improve the vibrancy of the local market and draw more exciting listings are not new. The Gems scheme, for instance, was originally introduced in 2019 to defray the cost of seeking a local listing, and develop the equities research ecosystem. MAS said last week that the latest S$50 million being allocated to the programme will provide additional funding for research on listed companies, and help research houses reduce the cost of distributing their work through digital media. There will also be new funding support for research on private companies with a strong Singapore presence. The idea is to stoke investor interest in these companies, and build a pipeline of potential listings. Meanwhile, listing grants under Gems will be expanded to cover Singapore Depository Receipts (SDRs), and foreign Depository Receipts with underlying Singapore stocks. The overall funding for primary listed exchange-traded funds (ETFs) will also be increased, while a new funding sleeve will subsidise cross-listed and feeder ETFs. These moves are aimed at broadening the investor base for Singapore equities and spurring liquidity in the local market. But why were earlier rounds of subsidies for research and new listings not more successful? Why would it be different this time around? Was a big demand-side initiative such as the EQDP the only missing piece to the puzzle? My own view is that the EQDP has the potential to make a big difference in boosting overall liquidity in the Singapore market. In the end, however, this liquidity will flow towards opportunity. Back in February, as the STI began breaching new all-time highs for the first time in nearly 18 years, this column pointed out that the robust gains charted by the index since the end of 2023 were driven by a narrow group of companies – which had been actively unlocking value and strengthening their core businesses. The key to restoring the vibrancy of the Singapore market is for more companies to similarly prioritise shareholder value. Fund managers under the EQDP should use their influence as shareholders to ensure this happens at the companies in which they are invested – even if it means running up against the vested interests of their boards and controlling shareholders. Accessibility and accountability This brings me to the idea of enabling investors to seek recourse when they suffer losses due to market misconduct. MAS said it will consult later this year on proposals to enable investors to ride on a court action or civil penalty to seek compensation. MAS will also consult on proposals to allow for representatives – such as the Securities Investors Association (Singapore), or Sias – to organise and carry out legal action on behalf of investors. In addition, MAS will consult on setting up a grant scheme to defray the costs of organising investors and taking legal action for cases involving market misconduct. While the proposals MAS has in mind may address the 'friction' investors face in taking civil action against companies, I wonder if they will be all that helpful in practice. In the case of Noble Group, for instance, the authorities only commenced investigations in late 2018, more than three years after Iceberg Research began sounding the alarm about the company's financial statements. By the time MAS imposed a civil penalty of S$12.6 million on the group in 2022, most of its value had already been lost. Unless regulators can act more quickly when trouble emerges, investors may have little to gain by trying to ride along with them and may be better off quickly selling their shares instead of seeking recourse. As for representatives taking legal action on behalf of investors, Sias said last week that it 'stands ready to act' if appointed to assist with any litigation. However, it reiterated its long-held position that it is better to engage with companies in the boardroom rather than a courtroom. 'If this time-tested approach should fail, Sias will then seek mediation at the Singapore Mediation Centre,' it added. The way I see it, Sias should not be pushed to take on a role that does not align with its philosophy. It may be more efficient for MAS to create an entity for the specific purpose of taking legal action on behalf of investors when market misconduct occurs. The appropriate forum for investors to engage with listed companies on most matters, in my view, is neither the boardroom nor the courtroom but the public square. Besides enabling investors to seek recourse when companies stumble, perhaps MAS should also push the boards and management of untroubled companies to make themselves more accessible and accountable to investors. As the EQDP spurs liquidity, this could be an important aspect of forging lasting vibrancy in the Singapore market.
Straits Times
5 hours ago
- Business
- Straits Times
S'pore stock market climbs after MAS allocates $1.1b to 3 fund managers for small-cap investments
Find out what's new on ST website and app. The benchmark Straits Times Index closed on July 25 at around 4,261 points, buoyed by stocks such as DBS Bank, Yangzijiang Shipbuilding and DFI Retail Group. SINGAPORE – Whoever said the Singapore stock market was boring would have had to eat their words, given the amount of action that took place last week. For starters, the Monetary Authority of Singapore (MAS) on July 21 said it would allocate a combined $1.1 billion to three fund managers to invest in the local stock market. With MAS putting money to work through the fund managers, the hope is that others will follow suit. The three fund managers are Avanda Investment Management, Fullerton Fund Management and JP Morgan Asset Management, with the next batch of fund managers expected to be announced by the fourth quarter of 2025. The $1.1 billion is part of the $5 billion set aside under the Equity Market Development Programme announced by MAS in February, which allocates capital to a range of funds managed by local as well as foreign fund managers based in Singapore. Eligible fund strategies include those focused on Singapore equities, or with a significant allocation to them. MAS deputy chairman Chee Hong Tat said on July 21 that the asset managers should help crowd in private capital, and boost interest and liquidity in Singapore equities, particularly small to mid-cap companies. Mr Chee, who is also Minister for National Development, added that the aim is not just to inject funds into the Singapore market, but also to develop the fund management industry. Top stories Swipe. Select. Stay informed. Singapore Sewage shaft failure linked to sinkhole; PUB calling safety time-out on similar works islandwide Singapore Tanjong Katong Road sinkhole did not happen overnight: Experts Singapore Workers used nylon rope to rescue driver of car that fell into Tanjong Katong Road sinkhole Asia Singapore-only car washes will get business licences revoked, says Johor govt World Food airdropped into Gaza as Israel opens aid routes Sport Arsenal beat Newcastle in five-goal thriller to bring Singapore Festival of Football to a close Singapore Benchmark barrier: Six of her homeschooled kids had to retake the PSLE Asia S'porean trainee doctor in Melbourne arrested for allegedly filming colleagues in toilets since 2021 The move helped to lift the benchmark Straits Times Index (STI) to an all-time high of 4,273 points on July 24. The blue-chip index closed on July 25 at around 4,261 points, buoyed by stocks such as DBS Bank, Yangzijiang Shipbuilding and DFI Retail Group. Smaller-cap stocks in the spotlight But it was the smaller, non-STI stocks like Nam Cheong, Oiltek International, Nanofilm Technologies and newly listed Lum Chang Creations that stole the spotlight last week. Nam Cheong jumped more than 27 per cent to close the week at 72 cents. Malaysia's biggest owner of offshore support vessels has recorded strong business performance in the past year and has three big long-term contracts worth RM1.7 billion (S$516.2 million). At 92 cents, Oiltek went up by 23.5 per cent through the week, after the company proposed a secondary listing on Bursa Malaysia. However, the company's chief executive Henry Yong said the proposed secondary listing is 'at a preliminary stage and will involve extensive preparatory work', and did not commit to a timeframe. Nanofilm closed on July 25 at 78 cents, up over 16 per cent through the week. This was despite mixed reviews from investors and analysts on its stock, which could have been influenced by matters such as reports of a potential acquisition of a minority stake in Sydrogen Energy, as well as tariff uncertainties. Lum Chang Creations had a great start on the Singapore Exchange's Catalist board on July 21, when it began trading at 30 cents and rose to as high as 33.5 cents through the day. It closed its first day at 30.5 cents, 22 per cent above its initial public offering price of 25 cents. The property revitalisation firm closed the week on July 25 at 38.5 cents. Other small-cap stocks such as Wee Hur, Frencken Group and iFast also jumped. Selling of a business and a resignation Shares of Singapore Post ended the week at 63 cents, down 2.33 per cent, despite having risen to a three-year high of 65.5 cents earlier in the week. On July 22, SingPost announced the sale of its entire freight forwarding business, Famous Holdings, for about $177.9 million. The move is part of the company's strategy, announced in March 2024, to 'divest non-core assets and businesses to recycle capital'. The sale resulted in an estimated realised gain on disposal of $10.5 million and about $104 million in cash for the company. Maybank analyst Jarick Seet told The Straits Times that the monetisation of assets will continue to be the key for share price performance for SingPost. He added that the company is also looking to sell its flagship retail-commercial mixed development SingPost Centre in Paya Lebar Central, but he expects that to happen only in 2026. Catalist-listed Aoxin Q&M Dental ended the week up 4.3 per cent at 4.9 cents, after announcing on July 22 the resignation of its executive director and chief executive Shao Yongxin. The company's audit committee received a whistle-blower report against Dr Shao on July 21, and said it had launched an investigation into the matter. Aoxin cited 'differences in views and opinions' with its parent, mainboard-listed Q&M Dental Group, regarding the strategic direction of the dental business as the reason for Dr Shao's resignation. Other market movers Shares of ComfortDelgro jumped by more than 13 per cent through the week, closing on July 25 at $1.64, levels not seen since 2021. This came after Maybank analyst Eric Ong issued a July 25 report calling the stock a 'massive laggard' excluded from the recent 'super-charged' market rally. He noted that the transport provider continues to deliver 'respectable' earnings growth and a decent yield of almost 6 per cent, and could also be one of the 'prime candidates' to benefit from MAS' fund allocation initiative. DFI rose 13.5 per cent through the week to close on July 25 at US$3.54, after announcing that its underlying profit rose 38.9 per cent to US$105 million (S$134.5 million) for the first half ended June 30, from US$75.6 million in the same period the year before. The supermarket and retail store operator attributed the profit growth to lower financing costs and an improved showing in its health and beauty, and food segments, among other factors. Sales in DFI's health and beauty segment grew 4 per cent on the year to US$1.3 billion and profit grew 8 per cent to US$109 million on a like-for-like basis. ST Engineering's stock reached a new high of $8.94 on July 24 before closing the week at $8.87. This was after it announced on July 23 that it had secured about $4.7 billion worth of new contracts in the second quarter of 2025. These comprised $1.5 billion from its commercial aerospace segment, $1.5 billion from its defence segment and $1.7 billion from urban solutions. Another stock that did well was Keppel DC Reit, which closed the week at $2.32, up by 1.3 per cent. This came after it reported on July 25 strong financial performance for the first half ended June 30, with a 57.2 per cent year-on-year jump in distributable income at $127.1 million. This was driven by the acquisition of data centres Keppel DC Singapore 7 and 8 and Tokyo Data Centre 1, alongside contract renewals. Distribution per unit for the first half of 2025 increased 12.8 per cent year on year to 5.133 cents. Engineering firm Hiap Seng Industries more than doubled in value after it announced on July 23 that Indonesian petrochemical producer Chandra Asri had purchased an 11.9 per cent stake in the company. Shares of the steel fabrication service provider closed on July 25 at 3.9 cents, more than triple its value at the start of the week. What to look out for this week Several results and business updates are expected this week. Great Eastern, Mapletree Industrial Trust, Raffles Medical, CapitaLand Ascott Trust, Seatrium and OCBC Bank are among those expected to announce earnings for the first half of financial year 2025, while Singapore Airlines will give its business update for the first quarter of financial year 2025/2026 on July 28.
Independent Singapore
3 days ago
- Business
- Independent Singapore
Shifting tides: Lion City lures Hong Kong investors
SINGAPORE: The financial scene in Singapore is changing as more and more Hong Kong investors see the city-state as a refuge from regional unpredictability. The Singapore Exchange (SGX) is capitalising on this trend by putting significant market reforms and initiatives into place. A recent DBS Treasures Affluent Investor Survey, released in July 2025, found that 27% of affluent investors from Hong Kong and mainland China are now thinking about diversifying their portfolios by purchasing Singaporean stocks. The political stability of Singapore, sometimes referred to as the 'Switzerland of the East,' and its growing significance as a gateway to Southeast Asian markets are significant considerations. The city-state has put in place alluring incentives in an attempt to attract companies and investment. The central bank of Singapore announced a 20% tax refund for primary listings in February 2025 as one such measure. Singapore is making a strong case for itself with tax incentives and business-friendly policies that are drawing interest from regional investors. In a media release, Amy Kwan, Head of Business Planning, Customer Segment and Ecosystem, Consumer Banking Group & Wealth Management, DBS Bank (Hong Kong) Limited, said, 'Affluent investors are demonstrating strong confidence, resilience and adaptability when navigating a complex economic environment. They are seeking global investment opportunities to diversify their investment portfolios. 'The findings reaffirm that communications with trust relationship managers for a holistic investment advice is essential and important, especially among those with higher investable assets, despite many already leveraging digital tools when making investment decisions. Affluent investors are also investing beyond the borders.' The strategy used by SGX goes beyond standard market stimulation. Singapore's central bank's $5 billion Equity Market Development Programme (EQDP) run by its central bank is a concerted attempt to revitalise the stock market from a number of perspectives. Important tactics the central bank has announced include: Drawing in Secondary Listings: Singapore Depository Receipts (SDR) are being introduced by SGX to increase trading options and target foreign companies for listings in Singapore. Strengthened Research Projects: With an emphasis on cutting-edge industries like artificial intelligence, healthcare, and novel business models, the exchange is developing comprehensive research coverage for possible IPO candidates. Education for Investors: More information about new investment opportunities and attention to lesser-known stocks are being provided by proactive efforts. See also Singapore shares open lower on Thursday—STI dropped 0.4% Thanks to strong earnings results from important Temasek portfolio companies like DBS Group Holdings and Singtel, the Straits Times Index (STI) has also reached all-time highs. There are still issues, though, because roughly 85% of trading turnover is made up of the top 30 STI component stocks. The ongoing trade tensions between the United States and China have increased Hong Kong investors' interest in Singapore. At least five Chinese or Hong Kong-based businesses are getting ready to make dual listings or initial public offerings (IPOs) on the SGX within the next 18 months, indicating growing confidence in Singapore's market potential. With 63% of investors prioritising tech-driven opportunities, the technology and innovation sectors are especially alluring. However, SGX's head of equities, Ng Yao Loong, stresses a practical approach. In an interview with The Edge Singapore, he shared: 'They are all well-meaning, but we know that these measures have to be self-reinforcing, such that the liquidity flywheel can start turning. Liquidity begets liquidity on its own, but sometimes it is quite difficult.' The SGX aims to create a self-reinforcing liquidity ecosystem. This will pull in more investment through transparency, equity, and strategic partnerships. It won't directly challenge Hong Kong's historical dominance in share sales. Rather, Singapore seeks to establish a place for stable, income-producing companies that cater to Southeast Asia. The city-state is working to establish itself as a strong, forward-thinking finance centre in light of the continuous global unpredictability. Only the upcoming months will see whether these initiatives can result in a long-lasting shift in the local investment climate.
Yahoo
3 days ago
- Business
- Yahoo
MAS is Injecting S$1.1 Billion into Small & Mid-Cap Companies: 5 Singapore Stocks That Could Benefit
There's good news for the Singapore stock market. Back in February this year, the Monetary Authority of Singapore (MAS) announced the formation of an Equities Market Review Group (EMRG) that will work on measures to improve liquidity and valuations. Just this week, MAS appointed the first three fund managers and will allocate an initial sum of S$1.1 billion under the Equity Market Development Programme (EQDP). These funds have a mandate to improve liquidity on the local bourse and broaden participation in Singapore equities, with a focus on allocation to small and mid-sized companies. Here are five such companies that we believe can benefit from this injection of liquidity. Food Empire (SGX: F03) Food Empire is a food and beverage (F&B) manufacturing and distribution group. The group's portfolio of products includes instant beverages, snack foods, and food ingredients that are sold in over 60 countries. Food Empire operates nine manufacturing facilities in six countries. The group reported a mixed set of results for 2024 with total revenue rising 11.9% year on year to US$476.3 million. Normalised net profit, however, fell by 11.4% year on year to US$50 million because of high coffee prices and higher overall expenses. A total dividend of S$0.08 was declared and paid, comprising a final dividend of S$0.06 and special dividend of S$0.02. Food Empire reported an encouraging business update for the first quarter of 2025 (1Q 2025) with total revenue rising 16.3% year on year to US$136.6 million. Earlier this month, the F&B group announced plans to invest US$37 million to expand its spray-dried soluble coffee manufacturing facility in India. Later in the month, Food Empire announced a strategic partnership with Santan to co-develop a new range of products and launch a new line of ready-to-drink beverages. ISOTeam Ltd (SGX: 5WF) ISOTeam provides repairs and redecoration (R&R) and additions and alterations (A&A) works with major customers including town councils, government bodies, and private sector building owners. For the first half of fiscal 2025 (1H FY2025) ending 31 December 2024, total revenue rose 4.2% year on year to S$65.4 million. A 28.5% year-on-year plunge in R&R revenue was more than offset by a 61.6% year-on-year surge in A&A revenue. Net profit shot up 36.5% year on year to S$1.9 million. The group's order book stood at S$188.7 million as of 11 February 2025, and will support the group's activities up till FY2029. In the medium term, ISOTeam will also offer professional end-to-end managed services to help clients build an effective robotic workforce. CSE Global (SGX: 544) CSE Global provides electrification, communications and automation solutions across different industries. The engineering group has a presence across 15 countries with 61 offices and more than 2,000 staff. For its 1Q 2025 business update, the group saw revenue inch up 4% year on year to S$205.5 million. The increase was driven by the Communications and Automation business units. Order intake, however, fell by 11.3% year on year to S$155.3 million. As a result, CSE Global's order book declined by 14.4% year on year to S$616 million. The group completed the acquisition of Chicago Communications LLC back in April 2025, but management warned that global uncertainty and inflationary pressures may continue to present uncertainties for the business. UMS Integration (SGX: 558) UMS Integration provides equipment manufacturing and engineering services to original equipment manufacturers (OEMs) of semiconductors and related equipment. The group has production facilities in Singapore, Malaysia, and the USA. For 1Q 2025, UMS Integration saw revenue rise 7% year on year to S$57.7 million. Net profit stayed flat year on year at S$9.8 million. The group declared an interim dividend of S$0.01, down from the S$0.012 paid out a year ago. Management believes the group is well-positioned to ride the wave as global fab equipment spending for front-end facilities is expected to rise this year. UMS Integration's new key customer is seeking to divert its US supply source to Asia, and the group is seeing strong order flow. In the coming months, UMS Integration will carry on with qualifications of many new product introductions for its new key customer. Frencken Group Ltd (SGX: E28) Frencken provides comprehensive original design, original equipment, and diversified integrated manufacturing solutions. The group serves customers in the aerospace, analytical life sciences, automotive, and healthcare industries. For its 1Q 2025 business review, Frencken reported revenue of S$215.8 million, 11.5% higher than the previous year. Gross margin also improved slightly to 14.8% from 13.7%. Net profit stood at S$10 million, up 12% year on year. The group does not believe that Trump's tariffs will have any major impact on its sales. Nonetheless, operating conditions may remain volatile and could be challenging. Frencken is discussing with relevant parties on supply chain adjustments and cost pass-throughs that are applicable. Back in June, Frencken's subsidiary entered into a land lease agreement of 33 years to develop a new manufacturing facility in Singapore. This site is for the expansion and consolidation of its Mechatronics manufacturing operations in Singapore. This new facility can also expand the group's capacity and scale up its business portfolio with key wafer fabrication equipment customers. As the STI hits record highs, long-term investors are asking: can dividends keep up? In this special National Day webinar, we dive into the earnings outlook for Singapore's top dividend stocks and what to expect in the months ahead. Secure your free seat here and stay ahead of the curve. What are the stock secrets to Singapore's 'quiet millionaires?' Chances are, you'll find at least one of their favourites in this free report. Download it now and see how these stocks could power your portfolio! Follow us on Facebook, Instagram and Telegram for the latest investing news and analyses! Disclosure: Royston Yang does not own shares in any of the companies mentioned. The post MAS is Injecting S$1.1 Billion into Small & Mid-Cap Companies: 5 Singapore Stocks That Could Benefit appeared first on The Smart Investor. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Straits Times
3 days ago
- Business
- Straits Times
MAS' measures spark cautious optimism for Singapore stock market revival: Analysts
Find out what's new on ST website and app. Following the latest announcements, the benchmark Straits Times Index reached an all-time high of 4,273 points on July 24. SINGAPORE - Efforts to revitalise Singapore's equities market are showing promise, with the benchmark Straits Times Index reaching an all-time high of 4,273 points on July 24 , following the latest announcements. However, analysts caution that there is still a lack of clarity on how the appointed asset managers will execute their strategies to effectively support local companies and boost market liquidity. This comes in response to the Monetary Authority of Singapore's (MAS) July 21 announcement allocating an initial $1.1 billion to three asset managers to invest in the Singapore stock market. Avanda Investment Management, Fullerton Fund Management, and JP Morgan Asset Management were appointed to manage the first $1.1 billion tranche under the $5 billion Equity Market Development Programme announced in February. The move, taken to revive trading on the local stock market as well as draw new companies to list, signals that the Government is invested in building a more attractive capital market ecosystem and boosting liquidity on the Singapore Exchange (SGX), experts said. Smaller companies that are not component stocks of the benchmark Straits Times Index (STI) have the most to gain. 'Small and mid-cap companies on SGX's mainboard and Catalist stand to benefit from a more vibrant capital market and broader investor base,' said Ms Lee Khai Yinn, head of continuing sponsorship at SAC Capital. Top stories Swipe. Select. Stay informed. Business GIC posts 3.8% annualised return over 20 years despite economic uncertainties Business GIC's focus on long-term value aims to avoid permanent loss amid intensifying economic changes Opinion No idle punt: Why Singapore called out cyber saboteur UNC3886 by name Asia Deadly Thai-Cambodian dispute puts Asean's relevance on the line Singapore Singapore urges all parties in Thailand-Cambodia border dispute to exercise restraint Life Hulk Hogan, who helped turn pro wrestling into a billion-dollar spectacle, dies at 71 Singapore Khatib Camp to make way for housing, with its functions moving to Amoy Quee Camp World Trump, Fed chief Powell bicker during tense central bank visit 'Improved visibility, liquidity and valuation will enable these companies to raise capital or pursue acquisitions using their shares at fair value to support future growth.' She added, 'Beyond injecting liquidity, the deployment should also aim to stimulate trading activity in the market.' Mr Jason Saw, CGS International group head of investment banking, added that the asset managers have a dual responsibility: to generate returns and to support market liquidity. 'We believe well-governed, fundamentally sound companies, particularly those previously overlooked, will benefit from better valuation support,' he said. Endowus chief investment officer Hugh Chung added that the initial step will help to bring attention to less-known names in the Singapore stock market, particularly the small and mid-cap companies, which lack representation in investor portfolios. Mr Shane Chesson, vice-chairman of the Singapore Venture and Private Capital Association, said the $5 billion could be 'boosted several times over' through the asset managers' fundraising capabilities, as well as growing investor interest, especially if strong local companies see the opportunity to list and grow. Mr Chesson added that once strong companies list and trade well, they'll generate their own momentum and, eventually, external catalysts won't be needed. In that light, companies considering a listing on SGX should begin evaluating the opportunity by examining the market, involving their boards early, and gathering initial feedback from key stakeholders, he said. More clarity needed Still, it remains to be seen how the $1.1 billion will be deployed in the market, and analysts say greater clarity is vital for companies to shape more informed listing and capital-raising strategies. How the funds will be used to deepen market liquidity and promote research remain key questions, said Mr Robson Lee, a corporate finance lawyer at law firm Kennedys Singapore. 'The devil lies in the details, and ultimately aspirant issuers can have a lot more confidence when they decide to list their companies. It's not just about numbers, we want to attract good quality companies.' He added that information on fund allocation to support promising small and medium-sized enterprises (SMEs) in their listing aspirations and corporate governance compliance is also crucial. So far, Avanda, co-founded by former GIC chief investment officer Ng Kok Song, is the only one of the three asset managers to have provided some detail on its strategy. It will launch a standalone Avanda Singapore Discovery Fund focused on SGX-listed companies, with a strong focus on small and mid-cap stocks. Its strategy will be to target stocks with value opportunities, local champions and turnarounds. Fullerton Fund Management has said it will set up a unit trust that will be invested in SGX-listed stocks across all market capitalisations. JP Morgan Asset Management did not reveal its plans, but noted that its team has extensive expertise in researching and investing in Singapore equities. Meanwhile, with more asset managers expected to join the Equity Market Development Programme by year-end, scepticism is growing over whether the original $5 billion allocation is sufficient for effective market deployment. MAS did not reveal how many asset managers it plans to appoint. When asked, it also said that it will not guarantee their investment performance, and that asset managers under the programme are solely responsible for their portfolio management decisions. Mr Lee noted that the asset managers should be afforded the flexibility to make dynamic investment decisions and not be hamstrung by strict targets and requirements set by MAS. On the $5 billion allocation, Mr Amit Singh, head of South and Southeast Asia capital markets at Linklaters, said there is 'no science or magic number'. He noted that policymakers will likely assess the impact of the initial investment before deciding if more funds are warranted. Any additional funds allocation must also take into account the broader global environment. More IPOs to come Ultimately, the true measure of success of MAS' programme will be whether it fosters a new generation of growth companies that provide long-term investment opportunities while maintaining strong corporate governance. This would be a much-needed step up from the current market, where a number of companies on Catalist, SGX's growth market board, have been languishing. Mr Chesson sees brighter days ahead for the Singapore market, citing recent IPOs such as NTT DC Reit and software services provider Info-Tech Systems, with more in the pipeline. 'We can't expect companies to list on a dime but the momentum is building and the overall market conditions globally remain quite conducive. People will be surprised by the scale and growth of some of the listings which are on the potential list right now.' Deloitte South-east Asia's transactions accounting support leader Tay Hwee Ling said that signs of recovery in the Singapore IPO market are emerging, alongside improving market conditions. 'We have seen renewed interest from global issuers, reinforcing Singapore's appeal as a location for cross-border capital raising,' she noted. Mr Ho Han Ming, partner at Reed Smith, said the move from a merits-based to a disclosure-based listing regime has been a positive step, but more such measures are needed to build a capital markets ecosystem that ensures transactions are valued fairly and transparently. Other measures announced by MAS on July 21, such as increased funding support for equities research, are also welcome. Financial platform Beansprout's chief executive Gerald Wong said: 'The new grant support for research on private companies with a strong local presence can help foster investor familiarity and visibility, potentially building a stronger pipeline of companies preparing to go public.' He noted that listed companies can also improve shareholder engagement and take more active steps to unlock value for retail investors, such as clearer capital allocation strategies, more transparent communication of growth plans, or improved dividend policies. SGX on the mend Whatever the case, investors have so far reacted positively to MAS' efforts to revive the stock market, with the STI crossing the 4,000-point mark for the first time on July 3. Mr Matthias Chan, head of equities research at SAC Capital, said the large-cap stocks' performance on the STI is not the best indicator of the broader market, and highlighted the small and mid-cap segment as a key area for growth. 'While the small to mid-cap space may be up 18 per cent over a year, it remains down around 6 per cent over a five-year period, suggesting there is further room for outperformance in this space.' In particular, the sub-$500 million market cap stocks would be one area to watch, he added. Many non-STI stocks have already benefitted from the returning interest. Examples include construction firm OKP, property development firm Wee Hur and instant coffee maker Food Empire, which have all hit record highs in recent weeks. Mr Thilan Wickramasinghe, head of research and regional financials at Maybank, said the recent market performance shows that Singapore stocks are finally catching up, and added that he does not believe they are overperforming. 'For more than a decade, the Singapore market has been lacklustre with depressed valuations. Much-needed market reforms, together with favourable macro and geopolitical tailwinds, are bringing back interest to SGX. 'While many stocks are now trading at higher valuations relative to their past, we must question whether historical multiples accurately reflected their value. It was common to see peers listed in other regional exchanges trading at materially higher multiples, and sometimes the very same assets listed abroad commanded significantly higher valuations,' he said. Mr Vasu Menon, managing director of investment strategy at OCBC, said small-cap stocks have underperformed by a wide margin compared to large-cap stocks over the last five years. 'The MSCI Singapore Index, a greater reflection of large caps, posted a 42 per cent return in the past five years in Singapore dollar terms while the MSCI Singapore Small Cap Index was flat with a mere 0.5 per cent.' Ultimately, progress in the Equity Market Development Programme shows that the Government is taking concrete steps to support smaller companies, which bodes well for the local bourse over the medium term, he added.
