In his Budget 2025 speech, Prime Minister Lawrence Wong briefly touched on the ongoing stock market review. The main goal is to make Singapore stocks more attractive and the Singapore Exchange , a listed entity here itself, will clearly benefit if the outcomes of the review are deemed effective.
As flagged by the Monetary Authority of Singapore on Feb 13, tax incentives to encourage more listings on the SGX are being introduced as initial measures to rejuvenate the Singapore stock markets.
For one, Singapore-based companies that intend to go public will receive a corporate income tax rebate of up to $6 million for companies with a market value of at least $1 billion and $3 million for those below this level, per year of assessment.
Next, new fund managers listing in Singapore will receive a concessionary tax rate of 5% on their qualifying income.
Thirdly, tax exemption is also applicable to fund managers with substantial investments with more than 30% of their AUM in Singapore-listed stocks.
“These initial steps could solidify the SGX’s position as a leading multi-asset exchange,” says DBS, which is calling SGX a “buy” along with a target price of $14.
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Lim Siew Khee of CGS International expects the various measures to potentially raise net new money inflows, total equity trading volumes and liquidity levels on SGX, spurring heightened interest from regional funds in Singapore-listed entities.
UOBKH, meanwhile, is looking for other measures to be announced down the road besides these tax incentives, which it calls an “anaemic measure” which may disappoint the market. “We look forward to more substantial and meaningful proposals in the coming months,” says UOBKH.
Shekhar Jaiswal of RHB is taking a cautious stance for now as well.
He maintains that a material improvement in SGX’s moderating earnings growth outlook is dependent on elevated local equity market sentiment, an increase in the number of new IPOs, successful new product launches and a favourable outcome of the ongoing market review exercise. “We await greater clarity on each of the above points before including their impact in our estimates,” he says.
Similar to UOBKH, Jaiswal is of the view that the tax incentives in themselves will not be enough to enhance the market breadth or improve the liquidity of the already languishing small and mid-cap companies. He has a “neutral” call and $12.80 target price on SGX.
