SINGAPORE: The Singapore Exchange (SGX) is set to be a key beneficiary of the Singapore government’s newly announced policies aimed at boosting the local equities market. The measures, which include the $5 billion Equity Market Development Programme (EQDP), focus on demand-side strategies designed to breathe new life into the market and enhance its appeal.
According to Singapore Business Review, RHB’s latest market outlook reveals that the SGX is expected to see a surge in listings and increased trading activity, particularly beyond the core components of the Straits Times Index (STI). These efforts will likely lead to heightened market participation, providing the SGX with ample growth opportunities.
Other sectors expected to benefit from the government’s initiatives include banks and broking houses such as DBS, OCBC, UOBK, and iFAST. According to RHB, the EQDP will also support large, liquid stocks as fund managers have been allocated a portion of the $5 billion to invest without restrictions on index component stocks. This opens up opportunities for growth for banks, real estate investment trusts (REITs), high-dividend companies, and growth stocks.
Fund management houses with a focus on Singapore equities are also expected to see positive outcomes from the programme. Similarly, investment banking and advisory firms may gain traction as more entrepreneurial companies seek to acquire undervalued small companies listed on the SGX.
The influx of capital could prompt these firms to inject profitable companies into acquired public entities or even privatize smaller companies with strong cash flow, later relisting them on the exchange at a higher valuation.
However, RHB’s report also highlighted the need for further clarity regarding the sectors that will receive priority funding under the EQDP. Additionally, RHB emphasized the importance of clearly defining the allocation of funds between large-cap and small- and mid-cap (SMID) companies to avoid the risk of funding being predominantly channelled into large-cap stocks.
The report also pointed out there was no mention of multi-family offices (MFOs), which cater to the wealth management needs of multiple families. RHB speculated that if single-family offices (SFOs) find the proposed changes to the Global Investor Programme (GIP) — requiring them to invest at least $50 million in stocks listed on Singapore-approved exchanges — too burdensome, they might redirect their investments to MFOs instead.
With a robust support framework in place, SGX and its stakeholders stand to benefit significantly from the new policies aimed at enhancing the vitality and competitiveness of Singapore’s equity markets.