Maybank Securities picks 18 non-STI stocks that stand to win from MAS’s market reforms

The Monetary Authority of Singapore (MAS) appointed on July 21 the first batch of fund managers under its $5 billion Equity Market Development Programme (EQDP): Avanda Investment Management, Fullerton Fund Management and JP Morgan Asset Management.

The announcement came earlier than expected, says Maybank Securities’ head of research Thilan Wickramasinghe, and two of the three appointees — Avanda and Fullerton — are linked to Singaporean state-owned investors GIC and Temasek.

In a July 21 note, Wickramasinghe says this shows a whole-of-government commitment towards reform. “These appointees also signal a focus on raising market liquidity, especially for small- and mid-caps.”

Wickramasinghe adds: “In our view, the first appointments serve as a blueprint of what to expect from others who would eventually make the cut (expected in 4Q2025).”

Wickramasinghe notes that trading of stocks outside of the Straits Times Index (STI) make up 20% of market average daily value. “We believe these measures should deliver [a] significant volume boost.”

The reforms are positive for the whole market, says Wickramasinghe, with small- and mid-caps likely to enjoy the more significant uplift to liquidity and valuations.

But not all will benefit equally. “Given market history, companies with stronger corporate governance credentials are likely to attract a disproportionate share of investments,” writes Wickramasinghe.

When coupled with trading liquidity, growth and balance sheet strength, Wickramasinghe sees 18 companies that stand out:

AEM Holdings

Centurion Corporation

ComfortDelGro

CSE Global

First Resources

Food Empire

Frencken Group

Golden Agri-Resources

iFast Corporation

Nanofilm Technologies

Riverstone Holdings

SATS

Sheng Siong Group

SIA Engineering

Singapore Post

StarHub

UMS Integration

Yangzijiang Financial

Three fund strategies

Among the three chosen asset managers, Avanda appeared the most ready to launch its winning fund strategy.

Avanda was co-founded in 2015 by former GIC CIO and 2023 Presidential Election candidate Ng Kok Song. In response to The Edge Singapore’s queries on July 21, Avanda says its strategy is fully allocated to Singapore-listed companies with a “strong focus” on the small- and mid-cap segment.

The firm says it will launch its Singapore equities strategy as a new standalone fund called the Avanda Singapore Discovery Fund. Avanda adds in an email: “There are three themes running through the strategy: Value-up, Local Champions and Turnaround. This distinguishes us from most of the existing Singapore-only funds, which are benchmarked to the indices and have a significant overweight to large caps.”

Avanda tells The Edge Singapore that the strategy will be managed by Richard Chan, partner and head of equities; and Sherman Lim, portfolio manager, equities. The duo will be supported by Avanda’s equity team.

Chan joined GIC in 1994 as an investment officer, where he later became managing director and head of Asia Pacific equities.

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MAS did not provide a breakdown of how the $1.1 billion sum will be divided across the first batch of three chosen asset managers. Avanda, along with Fullerton Fund Management and JP Morgan Asset Management (JPMAM), declined to reveal on how much they will each receive.

Avanda says the Avanda Singapore Discovery Fund will be launched “soon” and more details will be made available “in the coming weeks”.

Table: FactSet, Maybank IBG Research

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