The equities market review group established by the Monetary Authority Singapore (MAS) is targeting to have “mid-sized but good-sized” companies listing on the Singapore Exchange (SGX), says Lee Chuan Teck, chairman of Enterprise Singapore and chair of the review group’s enterprise and markets workstream.
Lee was speaking at a media briefing held on Feb 21, together with Chee Hong Tat, Minister for Transport, Second Minister for Finance and deputy chairman of MAS, and Chia Der Jiun, managing director of MAS and chair of the review group’s regulatory workstream.
According to Lee, the review group has already spoken to a few of such companies, who have operations in Singapore and the region and enjoy good brand recognition here. They are also not so large, with market capitalisations of above $10 billion, where they may look to list on a global exchange instead, he adds.
“For many of these companies, when we spoke to them about listing in Singapore, their concerns are the usual ones. They are looking for investor liquidity, valuation, they are looking for less regulatory burdens,” he says. “And so these are the things that we seek to address in this first set of measures. And we think what we are doing now will go some way to address some of their concerns and hopefully encourage some of them to list here.”
In his opening remarks, Chee noted that the review group outlined several key challenges pertaining to the local bourse, which includes growth companies preferring to list in the US due to valuations and the liquidity they can obtain there.
“So as we know, global capital and liquidity have concentrated in a handful of global stock exchanges, especially in the US and if you look at the US listed stocks, they account for about two thirds of [the] global stock market capitalisation,” he points out.
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As a result, investors from around the world are naturally drawn to putting their money into the US markets because companies on the US exchanges have outperformed global indices for a number of years, he adds.
With that in mind, Chee notes that the challenges facing Singapore’s equities market such as attracting new listings and growing liquidity is “not unique” to Singapore. He adds that there are many other exchanges in the world that are facing the same issues.
To this end, the review group will focus on strengthening the elements of Singapore’s ecosystem as well as increase the attractiveness of the country’s equities market to the companies they’re hoping to list on the SGX.
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The results should have these companies see the Singapore market as one where they can raise capital to fund their growth at a sustained pace, as well as maintain interest from their investor base for a longer period of time.
In his speech, Chee stressed that the group was “not looking for just one silver bullet” because there isn’t one. Instead, through its three pillars, demand, supply and regulatory moves, the group is seeking a “comprehensive and holistic” approach such that it will have positive impact on the market’s attractiveness and competitiveness for companies on the whole.
$5 billion a ‘good start’, says Chee
On the decision to launch a $5 billion equity market development programme (EQDP), the review group wanted to look at the best way to develop the fund management industry in Singapore and be able to bring in some private capital.
“The sizing [of the fund] is based on consultations with industry stakeholders, and we thought $5 billion will be a good start,” says Chee. “The focus after this will be to see how we can effectively implement this programme, to be able to achieve the objectives that are intended.”
He adds that the $5 billion is welcome to new and existing funds as the end goal is to grow the capabilities and grow the fund manager industry in Singapore.
“We want the mandates to include [a] focus on Singapore equities, so that that will also help to increase the interest and the investments trading in Singapore equities,” Chee continues. “As to how many I think we will have to conduct the request for proposal (RFP) process. We want it to be a robust process. We want to select good fund managers to work with us so that we are able to achieve those outcomes.”
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However, it is too early for the group to set targets at this stage, notes Chee, as the group will need to see how they can implement these suggestions effectively.
“The intention of the programme is also to seed a number of mandates and capabilities and a diversity of strategies so that the liquidity does not flow primarily into index companies, but will flow into other companies more broadly on the exchange,” says Chia.
As such, the group will be looking for fund managers to submit their interests. The group will also assess what the capabilities and strategies of these fund managers will be. “We will look for, you know, choosing those in order to achieve this diversity of strategies so that the broader market can benefit,” he adds.
Read more about the equities market review group:
- New family offices may contribute $15 billion to local bourse this year, suggests Maybank's Wickramasinghe (Feb 23)
- Review group measures to help bring US-listed 'orphans' back home: Neil Parekh (Feb 22)
- Proposing equity market changes a ‘balancing act’ that comes with ‘trade-offs’: Chee Hong Tat (Feb 22)
- 'This has definitely made my Friday': Azure's Wong (Feb 22)
- Plenty of overseas liquidity to be tapped amid plan to nudge family office money into local equities: Lang (Feb 21)
- MAS and Financial Sector Development Fund to launch $5 bil programme, adjust GIP to revive Singapore’s equities market (Feb 21)
- ‘Unaddressed elephant in the room’: Reservations about MAS equities market review group’s proposals (Feb 17)
- SGX shares close 5.8% lower after MAS equities market review group’s first proposal (Feb 14)
- MAS’s equities market review group proposes tax incentives as part of measures to boost Singapore’s bourse (Feb 13)
- Revitalising SGX: Beyond liquidity injections (Feb 6)
- ‘Not practical’ to rely on sovereign wealth to support, sustain Singapore equities: Gan Kim Yong (Jan 2)
- SGX Group chairman calls for ‘bold and decisive actions’ to solve stock market’s ‘longstanding issues’ (Jan 2)
- Making the Singapore market great again (October 2024)
- Revitalising Singapore equities market ‘not an easy task’, says Chee Hong Tat (September 2024)
- MAS’s equities market review group holds first meeting, unveils 31 workstream members (August 2024)
- MAS launches review group to strengthen equities market; recommendations to come within a year (August 2024)
