Changes needed to draw investors, firms for long-term growth of S’pore bourse: DPM Gan

SINGAPORE – The Singapore Exchange (SGX) must make regulations less of a burden for listed firms and those pursuing a listing, while better protecting investors.

Singapore must strengthen the larger ecosystem to build a stronger pipeline of quality listings, catalyse investor interest and sustain liquidity, which means reviewing the regulatory framework to ensure unnecessary friction is avoided.

This will empower good companies to list, and enable consumers to make informed investment decisions.

The must-do list was outlined by Deputy Prime Minister Gan Kim Yong, who noted on Jan 2 that while the local bourse has had a stellar year, with the best annual gains since 2017, it

attracted only a handful of initial public offerings in 2024.

DPM Gan, who was speaking at an event marking the first day of trading in 2025 and the 25th anniversary of the SGX, also noted the need to better define the profile of companies that the exchange ought to attract.

“With exchanges and equities trading becoming a lot more cross-border, it is not surprising that companies are enticed to list on foreign venues where liquidity is concentrated,” he said.

“By being clear with the profile of companies we want to attract, we can better design our incentives for these companies to consider Singapore as a listing venue, as well as for fund managers to launch products that invest in the local equities market.”

His remarks underscored the scale of the task set for the Equities Market Review Group,

which was convened in August 2024

to study measures to directly support both firms and investors, as well as create a more conducive trading environment overall.

A key challenge is to find ways to attract more firms to list here.

DPM Gan, who is also Minister for Trade and Industry, noted that the review group already has in its sights companies based in Singapore, as well as firms from emerging markets and in areas such as fintech, innovation and sustainability.

It is also studying how to better position Singapore’s equities market to attract high-quality mid-cap growth companies that are likely to be less visible on larger exchanges in the US, China and Japan, but can benefit from listing on the SGX due to brand familiarity with investors in the region.

DPM Gan also said that the bourse’s efforts must sustain liquidity and trading volumes beyond the initial listing.

“While it is inevitable that a sizeable proportion of liquidity will be concentrated in a number of well-known counters, we must aim to broaden liquidity beyond these counters,” he noted.

“This will be especially critical for smaller counters; for example, those with market cap between $500 million and $3 billion.”

The equities market must also reel in commercial capital such as institutional wealth, individual investors and family offices consistently, he said.

DPM Gan also resisted calls for more of Singapore’s sovereign wealth to be channelled into the local equities market, adding: “Instead, any use of public funding has to catalyse commercial capital for trading interest in our equities market to be sustained over the long term.”

Nonetheless, he noted that the review group is studying how to use seed capital to draw in more commercial capital, ensuring government funds are prudently deployed.

SGX Group chairman Koh Boon Hwee told the event that the exchange faces longstanding challenges despite its success as an international derivatives market: “While our derivatives business has seen tremendous success, the stock market has been particularly challenging.”

Although there has been an uptick in stock market volumes in recent months, driven by market sentiment and temporary investment flows, Mr Koh warned that equity markets are inherently cyclical.

“Sustained growth in the stock market cannot rely solely on sentiment or temporary investment flows,” he noted.

“For the Singapore stock market to be truly sustainable, a myriad of structural and policy issues must be addressed, certainly by SGX, but also with policymakers, regulators and all players within the ecosystem.

“Bold and decisive actions by policymakers and key participants in the ecosystem are essential.”

Mr Koh added that tackling the challenges facing the bourse “will take courage, a willingness to take risks and a collective commitment to change”.

A vibrant equities market is a major pillar of every financial centre, fuelling entrepreneurship, encouraging start-ups and venture capital and overall economic growth, he said.

“Together, we can build local and global marketplaces that are resilient, forward-looking and stand the test of time.”