A shift is underway in Singapore’s equity market that could redefine how investors value companies and allocate capital. Launched in February, the Monetary Authority of Singapore’s Equity Market Development Programme (EQDP) aims to channel investment toward the small- and mid-cap (SMID) segment, which has historically faced challenges with liquidity, coverage and visibility.
At the same time, Singapore plans to adopt disclosure rules aligned with the International Sustainability Standards Board (ISSB), to be mandated for all listed issuers by 2030, promoting consistent and comparable sustainability reporting across the market.
These developments may reshape how sustainability factors are assessed and priced in Singapore‘s equity market.
As the EQDP channels more active capital into SMID caps, forthcoming ISSB-aligned disclosures could enhance transparency around their sustainability profiles.
For investors, the combination may open opportunities to identify firms whose sustainability strengths are not yet fully recognised by the market, as well as those where engagement and improved disclosure could support long-term performance.
Lessons from Japan
Japan’s experience may hint at what is ahead for Singapore. The introduction of the Stewardship Code (2014) and Corporate Governance Code (2015) strengthened accountability and board independence, but the more significant shift came later.
Revisions to both codes in 2020 and 2021, respectively, explicitly embedded sustainability as a shared responsibility between investors and companies.
For investors, stewardship expanded to include sustainability factors within engagement practices, while companies faced higher governance expectations and clearer requirements to address environmental and social issues.
See also: Liquidity improving on SGX, with 65 small- and mid-caps trading over $1 million daily: JPMAM
Sustainability leaders have outpaced laggards in Japan
Our research has shown that companies with stronger MSCI ESG Ratings have historically outperformed their lower-rated peers in global equity markets.
Evidence from Japan over the past decade reinforces this pattern.
For Singapore, the combination of the EQDP and upcoming ISSB-aligned disclosures may create similar conditions, particularly within the SMID-cap segment, where investors may benefit from integrating sustainability more deeply into investment decision-making.
Finding opportunity
Singapore’s SMID-cap companies have traditionally struggled to attract investor attention, often due to limited analyst coverage, lower liquidity and less comprehensive disclosure than larger peers.
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As a result, investor confidence tends to be weaker and sustainability data for analysis remains sparse.
The EQDP and forthcoming ISSB-aligned disclosures may begin to address these challenges.
By channelling capital into the SMID-cap segment through dedicated fund managers, the program could encourage deeper research and more robust evaluation of sustainability profiles, ultimately raising standards of transparency and reporting.
ISSB adoption will further support this by providing a consistent framework for all listed issuers to disclose sustainability practices and performance.
Exploratory analysis of Singaporean SMID caps using MSCI Indicative ESG Scores suggests that smaller companies generally exhibit weaker sustainability profiles than larger peers, underscoring the need for deeper company-specific research.
Nevertheless, extending sustainability analysis across Singapore’s SMID-cap universe can help investors:
- Identify companies with relatively strong sustainability profiles that may attract capital earlier.
- Screen for companies with weaker profiles but potential to improve through engagement and enhanced disclosure.
Lower sustainability scores, greater upside potential for Singaporean SMID caps
Singaporean SMID-caps show lower sustainability scores across most sectors
A turning point?
The EQDP aims to channel more active capital into SMID caps, while ISSB-aligned disclosure requirements are expected to enhance the quality and comparability of sustainability data.
Together, these reforms could reshape how investors assess transparency and sustainability across Singapore’s market.
Japan’s experience illustrates how sustainability-focused reforms can create meaningful performance gaps between leaders and laggards.
In Singapore, the combination of the EQDP and forthcoming ISSB-aligned disclosures could foster similar dynamics, supporting more differentiated sustainability performance, particularly among SMID-cap companies.
Yu Ishihara is head of Asean Sustainability Investment Research at MSCI
Read more about the equities market review group and the Equity Market Development Programme:
- MAS consults on measures to enhance investor recourse for losses from market misconduct (October)
- More details on ‘Value Unlock’ programme for listcos to be unveiled in November: Chee Hong Tat (October)
- Fullerton launches first retail fund under EQDP to ‘value up’ SGX stocks (October)
- From America to Asia, ‘timing is right’ for SGX measures: Ng Kok Song (July)
- JPMAM’s EQDP-appointed fund strategy to focus on Asian equities with ‘majority’ allocated to Singapore stocks (July)
- MAS picks Avanda, Fullerton, JP Morgan under $5 bil Equity Market Development Programme (July)
- Equities market review group targeting ‘mid-sized but good-sized’ companies to list in Singapore (February)
- Proposing equity market changes a ‘balancing act’ that comes with ‘trade-offs’: Chee Hong Tat (February)
Read more about how Singapore is adopting the ISSB Standards:
- S’pore ‘not at all’ softening commitment to sustainability reporting: Ravi Menon (September)
- SGX RegCo’s climate reporting extension ‘very generous’, say experts (September)
- SGX RegCo expects ‘quality reports’ aligned with ‘ambitious’ ISSB standards, despite feedback of slow progress (August)
- SGX RegCo ‘aware’ ISSB climate reporting rules are ‘ambitious’, ‘welcomes’ SBF’s call to delay deadline (June)
- Nearly all listcos have begun climate reporting; SGX RegCo still mulling Scope 3 roadmap (March)
- SGX RegCo will require ISSB-aligned climate-related disclosures from all listed issuers starting FY2025 (September 2024)
- SGX RegCo launches consultation on incorporating ISSB standards into sustainability reporting rules (March 2024)
- Large private companies must report annual climate-related disclosures from FY2027: Acra, SGX RegCo (February 2024)
- SGX RegCo to seek feedback by year-end on mandating ISSB-aligned climate reporting (September 2023)
- ISSB standards 'best chance we have' at consistent sustainability reporting: SGX RegCo (July 2023)
- ISSB issues inaugural standards, creating common language for climate-related impact on companies (June 2023)
