From America to Asia, ‘timing is right’ for SGX measures: Ng Kok Song

The timing is right for measures by the Monetary Authority of Singapore’s (MAS) equities market review group to be implemented, says Ng Kok Song, co-founder and executive chairman of Avanda Investment Management. The decade-old asset management company is one of three firms selected by the central bank and financial regulator to launch fund strategies under the $5 billion Equity Market Development Programme (EQDP).

MAS announced on July 21 that it will place a combined $1.1 billion with fund strategies by Avanda, Fullerton Fund Management and JP Morgan Asset Management, although it stopped short of revealing a breakdown of the figure.

The EQDP, announced by the MAS’s equities market review group in February, aims to strengthen the local asset management and research ecosystem and increase investor interest in Singapore’s equities market, especially small- and mid-caps.

To be sure, this is not the first time the authorities and financial leaders have looked at ways to reinvigorate the local bourse.

But what sets this year’s efforts apart from prior initiatives, such as the Grant for Equity Market Singapore scheme (GEMS), introduced in 2019? Ng points to the “noticeable shift of money out of the US” into other markets, including Europe, the emerging markets and Asia. “Sometimes you need to have the wind behind your back, you know,” says Ng in a wide-ranging interview with The Edge Singapore.

Ng would know. Before co-founding Avanda in 2015, Ng had decades of experience in the public service, particularly building and managing the nation’s reserves. Even before Ng made headlines as a candidate during the 2023 Presidential Election, he was already a known figure in the civil service.

Ng began his career in the Ministry of Finance in 1970 before moving on to MAS and subsequently GIC, where — for 27 of his 42 years there — he served as chief investment officer (CIO).

Ng’s resume carries on — he was the founding chairman of the Singapore International Monetary Exchange (Simex), now the derivatives arm of the Singapore Exchange (SGX). During his career, Ng witnessed many boom and bust cycles, including the Asian Financial Crisis, the dot-com bubble, the Global Financial Crisis (GFC) and Covid-19.

Ng also had to navigate many crises over the past decade while helming Avanda. In 2015, when Avanda was just a fledgling firm, China devalued the renminbi. Though brief, it came as a shock to global investors and served as a key opportunity for the firm. “We thought it was a great opportunity to actually invest because we want to invest when the markets are down, not when the markets are up,” says the 77-year-old.

Another crisis came when US President Donald Trump was elected in 2016 on protectionist policies, focused on reducing the US trade deficit with China. Investors heaved a sigh of relief when Trump laid off on his plans, and the market recovered.

Covid-19, which sent markets plummeting in March 2020, was another uncharted territory, not just for Avanda, but for everyone. “But for us, you know, all my experience sort of helped me to understand that in such a situation, such as the pandemic, the US government and the Federal Reserve would take decisive action,” Ng says.

Ng consulted with policymakers from the US, Europe, Japan and China, and came to the conclusion that the Fed would deal with the crisis decisively, after learning from the mistakes they had made during the GFC.

Indeed, markets eventually recovered. “So, it was very important for us as investors not to panic, but instead, to maintain our stance, you know, in the assessment that the markets are going to recover because the authorities have to take decisive action,” Ng says.

When the Fed began to rapidly raise rates in 2022, Avanda decided to pare back its exposure to risk assets. Towards the end of the year, Avanda rebuilt its exposure when it felt that the tightening was about to be completed.

Ng attributes his ability to steer through 10 years of choppy waters to his team and colleagues, some of whom had joined him from GIC. “Experience helps a lot as well as our ability to communicate to our clients not to panic … That’s the reason why despite those four crises, we were able to turn over a respectable rate of return for our global portfolio,” Ng says.

While he is not part of the review group, Ng acknowledges that he expresses his views privately to the group members. “I suppose my value is that I’ve been in [the] investment business for 50 years. I was involved in the development of markets here in Singapore for a long time. So, I can see certain things from the longer-term perspective and all the issues involved,” he says.

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Candidly, Ng says he is “saddened” by the “hollowing out” of SGX, which faced issues including an “undervalued” market and a lack of liquidity, among others. As such, he hopes to “make a contribution” through Avanda in addressing this issue.

In addition to sharing his opinions, Ng believes he is in the position to “not just talk” but to participate in the EQDP.

From ‘vicious’ to ‘virtuous’ cycles

“What I think the challenge at SGX [is] … you might say that we went into a vicious cycle,” says Ng. This was built up over time with diminishing interest by global investors in Asia over the past decade, he adds.
“So in the last 10 years, there was a retrenchment of investor interest in the Asian markets as a whole, so that was a general sort of backdrop affecting our markets as well,” he notes.

The spate of delistings, which has accelerated since the announcement of the EQDP, is a global problem. “Even London, for example, suffered considerably, you know, and all exchanges, because the US market was not only sucking in investment money but also drawing in a lot of companies wanting to list in the US,” he says.

“It was part of this technological stocks boom in the US and … that is quite understandable,” he adds, likening the Nasdaq to the “World Cup” among exchanges.

And as investors’ interest shifted towards the US, SGX ended up seeing “less and less trading activity”, which led to liquidity thinning out. As such, a “vicious cycle” was formed, with both institutional and retail investors losing interest in the Singapore market.

That said, there is hope in turning this into a “virtuous cycle”, for Ng believes that the financial community can recover what he calls “the innovative spirit”, referring to Singapore’s initiatives in the 1970s and 1980s, such as the launch of the popular Nikkei 225 futures contract in 1986 even before Japan had its own.

One issue is the lack of institutional investors. “An institutional investor base is an important component of a well-functioning stock market,” says Ng.

Institutional investors, unlike retail investors, have the “analytical capability” to assess the value of a particular stock properly, says Ng. A lack of liquidity not only makes trading difficult, but also erodes the market’s ability to discover price and value, he adds.

Ng also believes the presence of institutional investors is also helpful in ensuring quality control, especially when it comes to “gatekeeping” new listings.

At the end of the day, Ng says a market needs experienced investors who can assess the value of a company enough to express their opinion.

Research, one of the initiatives the EQDP is looking to tackle, is also key. “I think one of the good things that the EQDP programme is doing as well is to encourage serious research,” Ng says.

In addition to appointing the three asset managers, MAS also announced a $50 million commitment to enhance the existing GEMS scheme, extending the deadline from end-2026 to end-2028. The additional sum has been set aside from the Financial Sector Development Fund (FSDF).

The enhanced Research Development Grant provides additional funding of $1,000 for each research report, with a further $1,000 for initiation reports and research on pre-initial public offering (IPO) firms and newly-listed companies.

This takes maximum funding from $4,000 currently to $6,000 per research report.

To broaden investor outreach and engagement, especially among younger investors, a portion of the $50 million will be made available to research houses to defray the costs of disseminating research via digital media.

MAS will also provide new funding to support research on private companies with a “strong local presence”, in a bid to foster investor familiarity and build a pipeline of potential listings. Applicants may submit proposals to MAS for consideration.

Shifting sands

After years of dominance by US-listed equities, investors are no longer as enamoured by “US exceptionalism” and are increasing their relative positions in other markets, says Ng.

Between January 2009 and December 2024, US stocks outperformed global markets with a return of 14.63%. During that same period, Singapore’s benchmark Straits Times Index (STI) returned 9.2%, while developed market (DM) stocks ex-US returned 6.83%. Emerging market (EM) stocks returned 6.61%.

Within the Singapore market, the MSCI Singapore Mid-cap returned 8.39% over the same five years while the MSCI Singapore Small-cap returned 8.69%.

In contrast, US stocks underperformed in 1H2025. US equities returned 6.2% compared to the STI’s return of 15.3%. DM stocks ex-US returned 18.99% while EM stocks returned 15.27%. Singapore Mid-caps returned 18.73% while Small-caps returned 7.63%.

“I notice the interest is mainly in the STI and also in the mid-caps. So, these are very significant shifts which investors are waking up to,” says Ng, adding that the Singapore market became “considerably undervalued” amid a renewed interest outside of the US markets.

In addition, the Singapore dollar has appreciated nearly 7% against the US dollar in the last six months, Ng points out. These have all culminated in a renewed interest in Asian markets.

“If you look at the Singapore economy as a whole, it is a very resilient economy,” Ng says, adding that Singapore usually benefits from geopolitical uncertainty. “We have proven ourselves over and over again that we have the capacity to address economic weakness.”

“I think foreign investors and even local investors [have] lost sight of that,” he adds.

Discovering value

Avanda told The Edge Singapore on July 21 that it would allocate its funds to Singapore-listed companies with a “strong focus” on the small- and mid-cap space.

“Being highly active and benchmark-agnostic allows us the flexibility to invest outside of the Straits Times Index constituents; this would direct more attention and liquidity to off-benchmark stocks,” said a spokesperson via email.

According to Avanda, its strategy has three themes: 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,” the spokesperson noted.

Ng (third from left) and some members of his team at Avanda, including Avanda Singapore Discovery Fund portfolio managers Richard Chan and Sherman Lim (fourth and second from right). Photo: Albert Chua/The Edge Singapore

The new fund, named the Avanda Singapore Discovery Fund, 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. The fund is named for its remit to discover value in the “undervalued” Singapore market, says Ng.

“What sets Avanda apart is that we are [an] indigenous Singaporean fund manager … We are based here, in Singapore. This is our only office; we are totally committed,” Ng says.

In a sense, Avanda has already made a significant commitment to the local bourse. It was one of the handful of cornerstone investors that helped to shepherd the recent Mainboard listing of Info-Tech Systems, a homegrown provider of business software for SMEs.

To him, participating in the EQDP is beyond delivering good returns, but about making a contribution to Singapore, or what he calls “national service”.

Over the past 10 years, Avanda has kept a strong and balanced portfolio in global bonds and equities. On average, they have seen returns of 6% per annum (in Singapore dollar terms) without leverage.

The fund will also be managed by a team of experienced managers, which can be expected, given Ng and his partners’ considerable experience. “We are as good as the global investors as far as Singapore is concerned, and we aspire to be as good, if not better, even for the whole of Asia. That was the vision behind setting up our company,” he says.

While Avanda invests in global markets, Ng notes that it is “timely” for the firm to step up its abilities to invest in Singapore first, given the attractive valuations; then to Asean, which is a “natural hinterland” for Singapore and the rest of Asia.

The asset manager is not looking at a particular target fund size, as it depends on market conditions, says Ng. “You don’t want to have a big pop… I’d rather like to see a gradual build-up. You know, money that stays in instead of punting,” he adds, referring to Minister Chee Hong Tat’s July 21 comments about Singapore stocks being “longer-term investments” and not only for “short-term punting”.

Ng revealed that the fund should be able to make returns of 8% to 10% a year, which he thinks is “pretty good”.

Beyond contributing via its fund, Ng is also looking at providing quality research and improving corporate governance.

“When the company comes to market to do an IPO, it’s not just about an instant success. The stock pops up on IPO day, then afterwards, [it] goes dead; nothing happens. But the question is: Will the company continue to do well [in] three to five years’ time?” he asks.

“That is our job, to assess the quality of the company and then at the same time, there’s a role for institutional investors like ourselves to play in terms of improving corporate governance,” he adds, noting that “certain companies” often “fall short” in terms of treating investors fairly.

Ng also sees a need for a market-making mechanism to induce day-to-day liquidity, as institutional investors are generally not regular traders.

“Regular liquidity” is still needed for investors looking to trade on a day-to-day basis, especially for small- and mid-caps, he adds, and there has to be “some liquidity for those transactions to take place”.

Ng says there are various methods of designing that “ideal mechanism”, such as having certain incentives for investors making bid and ask prices for thinly-traded stocks.

With every fund defining the small- and mid-cap space differently, Ng says factors influencing the strategy’s stock-picking will vary considerably. These would include the potential for improvement on a particular stock’s return on equity, P/E ratios, earnings that they are likely to achieve and more.

“All the indicators for the market as a whole suggest that the Singapore market is undervalued, including the mid-cap stocks. Small-caps are more difficult because they’re all so different,” he says.

Yet, the principles for determining a company’s value are universal and apply to all investment situations, says Ng, when asked if he will assess Singapore stocks differently compared to his experience at GIC, which invests in companies listed or based overseas.

That said, he acknowledges that investors in Asian markets, especially in Singapore, have a particular preference for income and dividend stocks, and are “not prepared to pay for growth”.

Reviving SGX again

This is not Ng’s first time stepping in to rejuvenate Singapore’s financial markets. He recalls helping to establish the local foreign exchange market in the 1970s and leading Simex through its early pioneering years.

“Those are instances where we can do very significant things. So, I’m quite confident that if we put our heads together, put our hearts together and get our act together, we can revive SGX. We can restore SGX, position it for future growth,” he says.

Ng may have retired from GIC more than a decade ago, but he remains a passionate and active participant in Singapore’s financial sector.

“I’ve spent my whole professional lifetime helping to invest [Singapore’s] reserves, helping to build up [Singapore’s] financial centre,” says Ng.

While Ng is optimistic, he recognises that the market “mustn’t expect that things are going to improve dramatically overnight”.

“It’s still early days, and no doubt you know, we will have to see which listings succeed, which don’t, and they’re all different,” he adds. “We don’t really yet have what I call the quality checks because we’re just beginning. It’s going to take us a few years to really rebuild the institutional investor base.”

The research community will also “need some time” to grow, which means investors should not expect “instant results”.

“But I think we have, we have restarted the process of engendering analyst, fund manager as well as investor interest,” he says.

Yet, at the end of the day, SGX and its listcos must show that they are worth the confidence injected into the markets. The companies will also have to justify the valuations they get.

“The problem with SGX is that the price discovery mechanism, the assessment of fair value, I think, has been impaired by this vicious cycle. So, by bringing [this] into a virtuous cycle, I think we will improve the value discovery process,” he says.

“Ultimately, investment is about trust. And building that trust again, in our markets, in our institutions, in our potential — that is something worth doing,” he adds. — With additional reporting by Felicia Tan and Jovi Ho

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