(Feb 24): Singapore’s plan to lift local equities by investing S$5 billion (US$3.7 billion or RM16.54 billion) with fund managers is seen as a good start, while regulatory shifts will allow a wider range of companies to seek listing on its bourse, analysts said.
Regulators will also require some family offices to deploy a portion of their assets into domestic stocks as among initiatives unveiled by a government-led review group to help revive the country’s languishing stock market.
The measures bode well for a market that’s seen delistings outnumbering new listings and rising competition from regional exchanges. Prominent companies such as Grab Holdings Ltd and Sea Ltd have gone public elsewhere. Reviving the stock market has become a national priority for Singapore, as it heads into a general election this year.
The stock benchmark Straits Times Index erased early losses to rise as much as 0.6%, while shares of bourse operator Singapore Exchange Ltd surged as much as 8.4%.
Here’s what analysts are saying:
Maybank Securities Pte Ltd, Thilan Wickramasinghe
- While not the direct sovereign wealth fund participation many market participants were hoping for, it is nevertheless a strong signal in the government’s commitment
- The plan is likely to help boost liquidity and valuations, while broadening market participation
- First line beneficiaries include financials and brokers, while REITs and small-and-mid cap stocks should see secondary benefits
Bloomberg Intelligence, Sharnie Wong and Lucy Wang
- IPOs in Singapore and investment in SGX-listed companies may get a slight boost from tax incentives announced in the government’s budget and other measures recommended by the taskforce on Feb 21
- The Monetary Authority of Singapore’s planned S$5 billion investment with Singapore-equities-focused funds is equal to about four days of Singapore’s stock turnover
Morgan Stanley, Nick Lord
- “Comments from government have consistently emphasised that there is no silver bullet but rather a multi-year, multi-step process”
- The investment fund plus crowding in from single family offices and other private investors is “useful,” but likely only adds 1%-2.5% to volumes
- This justifies base case earnings; measures expected at end of 2025 unlikely to be further near-term catalyst
JPMorgan Chase & Co, Harsh Wardhan Modi
- “Quite a promising set of initiatives, but largely priced in the near term”
- The progressive bits are around pro-enterprise regulatory stance with beginning of ‘decisive’ shift towards a more disclosure-based regime
- “This, in our view, is a significant positive, as it will allow a wider range of companies to seek listing at SGX”
- Among the most important statements underscoring this shift was from policymakers acknowledging that disclosure-based regulatory system and investor protection are not mutually exclusive
Citigroup Inc, Yong Hong Tan
- The plan raises a question whether the S$5 billion fund is one-off or recurring
- “Looking ahead, studies to introduce measures to lift companies’ focus on shareholder value could raise optimism on capital return”
- It’s likely supporting Singapore banks as near-term defensives amid FX/earnings uncertainties for Asean banks
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