Thilan Wickramasinghe, head of research at Maybank Securities, calls the first set of recommendations by the MAS market review group a "shot in the arm".
Among a whole raft of measures, the key was a $5 billion fund that MAS will allocate to various fund managers to invest in local equities outside the component stocks of the Straits Times Index - ie, the smaller caps.
"While not the direct sovereign wealth fund participation many market participants were hoping for, it is nevertheless a strong signal in the government’s commitment," states Wickramasinghe in his Feb 23 note, without directly naming GIC which had been suggested by many market commentators to be the one funding this revival.
In addition, new single-family offices applying through the global investor programme (GIP) with assets under management (AUMs) of at least $200 million are to allocate at least $50 million of that to invest in local equities.
According to Wickramasinghe, some 600 such offices set up shop in Singapore last year. If another 300 or so family offices are established this year - the same level seen in 2023 - this will result in additional inflows of $15 billion, "a significant boost", he reasons.
For context, combined institutional and retail inflows in the past 5-years have averaged at $9.6 billion a year.
See also: Singapore, Hong Kong face growth risks over US tariff war with China
Various other measures including streamlining IPO processes, tax incentives to entice fund managers and so on, have been announced.
"We believe these measures display a strong commitment to supporting the local bourse," says Wickramasinghe, as he names SGX Group as a key beneficiary due to higher trading and listing fees that can presumably be collected.
"We see multiple ecosystem benefits including strengthening private markets by improving valuation benchmarking transparency, to increasing professional services demand to support a larger listings pipeline," he adds.
See also: Over 80% of investors here remain interested or open to SGX stocks: SIAS-Beansprout survey
The three banks, DBS Group Holdings, Oversea-Chinese Banking Corp and United Overseas Bank are seen to enjoy a boost in their investment banking and advisory and brokerage-related fees as well, while listed brokers iFast Corp and UOB Kay Hian are also direct line beneficiaries.
In the bustling REITs space, "high quality" counters including CapitaLand Integrated Commercial Trust ; CapitaLand Ascendas REIT and Mapletree Industrial Trust could benefit from yield-seeking family office mandates.
Last but not least, the increased focus in local equities should drive flows to various small and mid caps such as CSE Global ; Frencken Group , AEM Holdings and ISOTeam, says Wickramasinghe.
Read more about the equities market review group:
- Equities market review group targeting ‘mid-sized but good-sized’ companies to list in Singapore (Feb 23)
- New family offices may contribute $15 billion to local bourse this year, suggests Maybank's Wickramasinghe (Feb 23)
- 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)
