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Business Times
2 days 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.
Business Times
7 days ago
- Business
- Business Times
MAS' S$5 billion investment fund set to lift undervalued, small-cap stocks: analysts
[SINGAPORE] Market reaction to the appointment of the first three asset managers to tap Singapore's S$5 billion Equity Market Development Programme (EQDP) on Monday (Jul 21) has been largely optimistic. But analysts caution that the initiative's success in spurring the equities market will depend on how these managers execute the mandate and utilise resources for long-term market growth. The Monetary Authority of Singapore (MAS) will inject a combined initial sum of S$1.1 billion to the three asset managers – Fullerton Fund Management, JP Morgan Asset Management and Avanda Investment Management. Each is likely to take a different approach. Fullerton Fund Management and Avanda Investment Management on Monday announced that they will launch new funds focused on Singapore equities. Fullerton Fund Management's Singapore equities unit trust will be invested in stocks listed on the Singapore Exchange (SGX), with exposure to stocks across all market capitalisations. Meanwhile, the Avanda Singapore Discovery Fund will focus on small and mid-cap stocks across the themes of 'value-up, local champions and turnaround'. Key factor Divya Doshi, managing director of sales for Asia and the Middle East at global investor services group IQ-EQ, told The Business Times that while MAS chose asset managers with institutional strength, the success of the EQDP will come down to 'how these managers execute on the mandate and contribute to long-term market development'. 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 Luke Lim, managing director at brokerage Phillip Securities, believes it is important that the managers fulfil MAS' objectives using its valuable resources. These include improving liquidity with significant allocation to SGX-listed small and mid-cap stocks. He said: 'Even before the deployment of EQDP, we have seen a major rally and re-rating of SGX-listed small to mid-cap stocks. There is now a pool of liquidity that will invest in undervalued small to mid-cap stocks, thereby improv(ing) the price discovery of the entire sector.' Jason Saw, group head of investment banking at brokerage CGS International, thinks the positive momentum will continue for small and mid-cap stocks. He noted that the market has already begun reacting positively to the MAS announcement, with many undervalued stocks seeing improved valuations. 'It is all about the marginal buying, and we think it will move the market,' he added. Doshi anticipates that the newly appointed managers will likely focus on small and mid-cap equities, growth-stage companies, and sectors that align with Singapore's strategic priorities, including sustainability, fintech and digital infrastructure. These areas are expected to play a central role, given the EQDP's goals to deepen liquidity, improve price discovery and broaden investor participation. The three managers have 'proven track records in managing Singapore equities, particularly in the small and mid-cap segments', noted Doshi. However, each may possibly approach the mandate in its own way. 'Some managers may initially allocate conservatively, to build performance credibility before venturing into less-liquid or higher-risk segments,' he added. 'Promising start' Doshi noted that MAS' selection 'reflects a deliberate and strategic choice' – one that is likely to instil confidence due to the managers' strong reputations and well-aligned strategies, particularly in addressing under-researched market segments. 'Importantly, their credibility and performance history could help attract third-party capital, including from international investors, amplifying the impact of MAS' initial S$5 billion commitment,' he said. However, whether it moves the needle immediately remains to be seen, he added. 'Without visibility into fund size, deployment timelines or specific mandates, the announcement may be seen as a promising start rather than a transformative shift.' Doshi believes the real impact will depend on how these managers engage with under-researched stocks, support initial public offering pipelines, and drive liquidity in segments that have historically been overlooked. Meanwhile, Saw expressed confidence that a significant portion will be deployed to the Singapore market, calling it a positive development for all stakeholders and market participants across the institutional, high-net-worth and retail segments. He noted that the fund managers will 'have a duty to generate returns within a broader mission of enhancing liquidity on the Singapore Exchange'. As a result, well-run, undervalued companies with strong governance are likely to see better valuations soon, he added. Similarly, Maybank Securities believes that small and mid-cap companies with stronger corporate governance credentials are likely to attract a disproportionate share of investments from the investment boost. These include semiconductor manufacturer AEM, Nanofilm Technologies International and air cargo handler Sats. Additional reporting by Navene Elangovan
Independent Singapore
22-07-2025
- Business
- Independent Singapore
Singapore central bank roped in JP Morgan, two others to manage stock market boost
SINGAPORE: Singapore is taking a new tack to revive its stock market, announcing a strategic S$5 billion initiative to attract investors and boost market participation. The Monetary Authority of Singapore (MAS) has chosen three asset managers: Fullerton Fund Management, JP Morgan Asset Management, and Avanda Investment Management. These firms will lead an effort to refresh the local equity landscape. Fullerton Fund Management is part of Seviora, a multi-asset management company owned by Temasek Holdings, Singapore's state investment fund. Incorporated in 2003, it has offices in Shanghai, Jakarta, and Brunei. JP Morgan Asset Management is headquartered in New York City and has offices in Tokyo, Hong Kong, and Singapore. Currently, it manages US$162 billion (S$218.7 billion) in the Asia Pacific. Avanda Investment Management was founded in 2014 in Singapore by former GIC executives Ng Kok Song, Quah Wee Ghee, and Sung Cheng Chih. Temasek backs it significantly—it invested US$3 billion in Avanda's Global Multi-Asset Fund. It has also secured funds from sovereign fund GIC and the Singapore Labour Foundation. Recent reports indicate it manages US$10 billion as of March 2025. They will receive S$1.1 billion to develop investment strategies aimed at increasing market liquidity and drawing in a wider range of investors. The programme targets especially small and mid-sized companies that have struggled to gain investor attention. In an interaction with the media, Chee Hong Tat, the Minister for National Development and Second Minister for Finance, commented: 'We want to see more participation from retail investors. This isn't about short-term trading, but about helping people build long-term investment portfolios.' This move comes amid growing concerns about Singapore's stock market, which has diminished compared to regional competitors. Over 100 global and local asset managers expressed interest in the programme, demonstrating strong enthusiasm within the industry. Key features of the programme include: Dedicated funds focusing on Singapore-listed stocks Daily investment liquidity Chances for retail and institutional investors Strategies emphasising smaller, emerging companies In addition to the investment programme, MAS is launching a S$50 million research support scheme. This funding will: Increase grants for equity research Support digital research distribution Develop research on private companies with strong Singapore ties See also How much could the CEO of Temasek Holdings be earning? The goal goes beyond just injecting money into the market. Minister Chee highlighted the aim of creating a more robust, transparent, and accessible investment environment. Fullerton Fund Management plans to launch a dedicated Singapore equities unit trust that covers stocks from various market capitalisations. Avanda Investment Management aims to create a 'Singapore Discovery Fund' focused on small and mid-cap stocks with growth potential. JP Morgan Asset Management has not disclosed any details, but according to its ASEAN equities team head, Pauline Ng, it will leverage its investment capabilities and local expertise to unlock opportunities in Singapore's equities market. This initiative adopts a deliberate approach to market development. By selecting specific asset managers and providing targeted support, Singapore aims to transform its equity market from a quiet exchange into a more vibrant investment hub. Future plans include selecting additional asset managers in late 2025 and 2026 after this first phase. To the investing public, the establishment is making it clear that it is creating more ways to access stock market wealth. See also Temasek Holdings and GIC on worldwide buying spree The programme shows MAS's commitment to keeping the financial centre competitive by addressing market challenges and creating new paths for investment growth.
South China Morning Post
21-07-2025
- Business
- South China Morning Post
Singapore to allocate US$856 million in kick-off of plan to boost stock market
Singapore plans to allocate about US$856 million to three asset managers, including JP Morgan Asset Management, as part of a broader effort to enhance liquidity and expand investor participation in the local stock market. The other asset managers named for the initial phase of Singapore's S$5 billion (US$3.9 billion) Equity Market Development Programme – which was first announced in February – were Avanda Investment Management and Fullerton Fund Management, according to a statement on Monday by the Monetary Authority of Singapore. The city state's central bank said it received more than 100 applications for the programme. The MAS said it would appoint additional asset managers in the fourth quarter to manage remaining funds. The central bank would also set aside S$50 million to strengthen local equity research and grow 'a more vibrant listed product ecosystem', the statement said. The details mark the first progress update in months from a government-led task force that was formed to address the local equities market's lagging performance in new listings and trading volumes compared with major regional peers. 'When we invited asset managers to put forth the proposals, we made clear to everybody that this is not just about injecting funds into Singapore's equities market,' said Chee Hong Tat, minister for national development. 'But we're really looking at also how to develop our fund-management industry.' In February, the equity market review group announced a raft of measures aimed at boosting the market. Other initiatives include requiring some family offices to deploy a portion of their assets into domestic equities and streamlining listing rules for companies seeking to go public on the stock exchange.
