Fund managers will be highly anticipating the list of shortlisted names to be announced in the third quarter for the $5 billion MAS Equity Market Development Program (EQDP), which was first announced on Feb 21.
Although Maybank Securities (Maybank) analyst Thilan Wickramasinghe notes that the amount can “go a long way” and grant significant liquidity and a valuation boost to the recipient stocks, “not all will benefit equally”.
Historically, Singapore’s small and mid-cap stocks, he writes, have had “patchy” corporate governance (CG) track records, with some having significant overhangs centred on minority protection, share manipulation, capital structures and acquisitions.
“Hence, we believe institutional investors are likely to prioritise good governance metrics when deploying initial capital,” writes the analyst.
Meanwhile, while the qualifying criteria for shortlisted fund managers is still unknown, Wickramasinghe sees that investment mandates with active management strategies in Singapore equities with a greater focus on non-index stocks are likely to be preferred.
“Extrapolating from the adjustments to the global investor programme (GIP), mandates that invest in S-REITs may rank lower in the selection criteria, in our view,” adds the analyst.
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Overall, once deployed, Wickramasinghe sees that the EQDP could boost market liquidity by 19 times, referring to 80% of the Singapore Exchange’s (SGX) average daily value (ADV) originating from Straits Times Index (STI) components with the rest contributing just $261 million of ADV year-to-date (ytd) in 2025.
He adds: “ If matching is required, where qualified fund managers have to proportionately deploy their own capital, there could be a significant multiplier effect, in our view.”
With this, the Maybank analyst has put together a list of 18 names which could enjoy increased institutional flows from the EQDP, after screening stocks between $300 million to $5 billion in market cap for high governance scores using Maybank’s proprietary environmental, social, and governance (ESG) 2.0 ratings.
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Where Maybank’s ESG 2.0 scoring is unavailable, Wickramasinghe uses CG scores.
On these metrics, he has only included companies ranked ‘strong’ or ‘average’ for governance, while screening for stocks with a higher ADV, strong three-year earnings growth outlooks and high levels of cash to market cap as a secondary criteria.
S-REITs have also been excluded given his view on the shape of investment mandates.
The 18 stocks identified by Wickramasinghe are AEM Holdings, Nanofim Technologies, Centurion Corporation, UMS Integration, CSE Global, Frencken Group, ComfortDelGro, First Resources, Singapore Post, Golden Agri Resources, Sheng Siong Group, Sats Group, IFast Corporation, Yangzijiang Financial, SIA Engineering, Food Empire Holdings, Starhub and Riverstone Holdings.
In both MIBG ESG 2.0 and Sustainalytics, CG factors such as board independence, CEO and board compensation, board diversity are scored not just on a last reported basis, but consideration is given to whether these factors are improving or declining over time.
