MAS primes Singapore equities, undervalued firms for major boost

SINGAPORE: The Monetary Authority of Singapore (MAS) plans to change the local equity market with its S$5 billion Equity Market Development Programme (EQDP), attracting optimism from local investors and analysts. This initiative focuses on small and mid-cap (SMID) stocks beyond the concentrated trading environment of the Straits Times Index.

Launched in February 2025, the programme will initially invest S$1.1 billion through three asset managers: Fullerton Fund Management, JP Morgan, and Avanda Investment Management. They have a clear goal: find undervalued stocks and encourage more investors to participate.

The MAS has chosen safe establishment names; all are asset managers with strong track records and institutional strength.  Already, the Singapore market has seen a major rally and re-rating of SMID stocks on the Singapore market. The new liquidity pool investing in undervalued SMIDs will improve price discovery across the sector.

Analysts have highlighted promising companies in various sectors. These include manufacturing leaders AEM and Nanofilm Technologies, fintech firms like iFAST, healthcare companies such as ParkwayLife REIT, transport stocks ComfortDelGro and SATS, and solid REITs including CapitaLand Ascendas and Mapletree Logistics Trust.

Morgan Stanley predicts billions in annual capital inflows, which could raise valuations by 20% to match global market standards. The MSCI Singapore Index, already up 13% this year, shows early signs of momentum and investor confidence in this strategic approach.

The EQDP aims to change Singapore’s investment landscape by elevating market liquidity. It seeks to increase investor participation, focus on stocks with good governance, and create opportunities for new corporate leaders.

Analysts believe SMID stocks could see liquidity increases up to 19 times, which would narrow the valuation gaps with larger companies. Tax exemptions and simplified listing processes will make the market more appealing globally.

Success depends on how well fund managers perform and on stable global economic conditions. While immediate gains for the Straits Times Index (STI) might be modest, the programme offers long-term restructuring of Singapore’s investment ecosystem.

The EQDP represents a bold new vision for Singapore’s equity and is set to impact the city-state’s broader corporate landscape. The move aims to position Singapore as an energetic platform for innovative companies and savvy investors. By focusing on overlooked sectors and providing strategic capital, MAS is paving the way for Singapore’s most promising companies to gain serious investment and global attention.