Improved research coverage and more needed for MAS boost to SGX to work: Fund managers
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More updates on the Monetary Authority of Singapore's Equity Market Development Programme are expected by the end of 2025.
ST PHOTO: LIM YAOHUI
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SINGAPORE – Refreshed research coverage to aid in the discovery of quality companies, in tandem with more measures to boost demand, will be crucial for the Equity Market Development Programme (EQDP) to achieve lasting impact, fund managers said.
They were speaking on the Monetary Authority of Singapore’s (MAS) measures to revitalise the Singapore market at the SAC Capital Connect event on Sept 23, organised by the investment banking firm at the Singapore Exchange (SGX) Centre.
Their outlook on the impact of the EQDP was largely positive, saying that this is the first time there is a concerted effort from all segments of the financial market aimed at a single objective of attracting investor interest and capital.
But the fund managers also noted that there are both supply- and demand-side problems, like improving market research and boosting retail investor demand, that would need to be addressed for the EQDP to be effective in the longer term.
Mr Kenneth Tang, senior portfolio manager of Asian equity at Amova Asset Management, said market research should aim to strengthen the “Singapore Inc” narrative, especially in certain industries where the country has a competitive edge – such as the services sector – and showcase Singapore companies better on the world map. “This would go a long way to refresh the excitement of Singapore small- and mid-cap stocks,” he said.
Mr Vincent Toe, co-founder of ICH Group, said such research should also compare Singapore companies against other markets to achieve a fair valuation that will help Singapore companies raise capital and grow.
He noted that retail investor interest has been curbed by overprotection from regulators and the fear of illiquidity, resulting in large bid-offer spreads not being closed.
More designated market makers for the small- and mid-cap companies and a constant stream of quality issuers would ultimately be good for the market, said Mr Toe.
“With the revaluation of the market segment, we are trying to convince some of these companies that have listed overseas to come back and list here. When that happens, the SGX will become a stock exchange to be reckoned with and there will be longevity for the market,” he said. Besides boosting investor interest, the EQDP could offer an opportunity to revitalise the market in a new direction.
Mr Kenneth Ong, portfolio manager of Asian equities at Lion Global Investors, said the combination of the EQDP and quality companies can work in tandem with the new indexes launched by SGX on Sept 22.
The bourse announced the iEdge Singapore Next 50 Index and iEdge Singapore Next 50 Liquidity Weighted Index
More quality companies would then be incentivised to set up their headquarters in Singapore, which would bolster the effectiveness of the EQDP, he said.
The fund managers also noted that the EQDP roll-out in phases is the right approach to improving liquidity in the market.
This prevents the market from being overwhelmed by a sudden large injection of liquidity, which can cause excessive volatility.
So far the regulator has announced, in July, that $1.1 billion of the $5 billion under the scheme will be allocated to three fund manager s :
Avanda Investment Management aims to launch its Avanda Singapore Discovery Fund in October
Mr Tang said the injection addresses the issue of capital intermediation, and together with demand-side measures will create a multiplier effect which would then drive more supply-side initiatives in the longer term.
More updates from MAS are expected by the end of the year, including the announcement of additional fund managers under the programme.
Mr Tan Kian Tiong, partner and head of capital markets at SAC Capital, said: “Singapore’s capital market is at an inflection point, and it is vital that we work cohesively with all stakeholders to continue building its strength and depth.”
The event brought together more than 160 participants, including institutional investors, high-net-worth individuals, and representatives from private and public companies.
