Well-off foreigners who want to join the growing trend of setting up family offices here in Singapore will soon be nudged into channelling a significant proportion of their assets to be parked here into Singapore-listed stocks.
As part of the long list of proposals put forward by the equities market review group on Feb 21, new single-family offices with assets under management (AUM) of at least $200 million are to channel at least $50 million into local stocks under the global investor programme (GIP).
Currently, family offices can invest in a range of other asset classes ranging from debt securities to funds managed by other managers here as well as privately-held businesses here.
With the number of family offices having already surged ten-fold to more than 2,000 last year between 2019 and 2024, will this proposal be not as effective in tapping this potential pool of funds?
“You'd be surprised — there's still a lot of liquidity. There’s still a lot of money that potentially can be tapped upon,” says Arthur Lang, chief financial officer of Singapore Telecommunications .
“Everyone talks about Chinese money — we've attracted that fair share of it.” However, there’s also plenty of untapped wealth from India, Japan, and increasingly, the Middle East, he says.
See also: MAS Review Group’s proposals may boost short-term returns, but will it be sustainable?
Total AUM in Singapore, as at the end of 2023, reached $5.4 trillion, up 10% y-o-y. Local stock market observers do not see this massive pool of money invested in local equities.
Lang believes that with more uncertain and volatile times, Singapore is seen ever more so as a neutral ground, and also a “lighthouse, that rock of stability”.
“Given what's happening out there, we are not too late,” says Lang, speaking in his capacity as a member of the review group.
See also: STI gives up day’s gains to close 0.06% lower on Feb 24
“I think it is a good time to come out with all these policies, and we will strengthen Singapore as an investment hub where it is deemed to be safe,” he adds.
While some family offices like to function like venture capitalists, there are also those preferring investments in assets that can give “very steady” dividends”, says Lang. “It depends what the family offices want,” he says.
In its 3QFY2025 business update on Feb 19, Singtel guided for a full-year dividend payout of 16.5 cents — an increase from 15 cents the company paid last year. The telco, under Lang, has put in place an active capital management strategy that puts a lot of weight on the visibility of dividends.
Lang adds that investors are also drawn to the Singapore dollar, which has been appreciating relative to many other regional currencies.
As one of the largest local listed companies, Singtel enjoys better following from investors than most other SGX-listed counters. Lang stresses that the proposals put forward by the review group are focused on mid-cap and small-cap stocks, which really form the bulk of the market.
However, various parties ought to play their respective roles right. Companies need to run a proper and profitable business; investors, especially retail folks need to understand the companies they are investing in. “You need the whole of ecosystem play to really make it work,” says Lang.
Lang believes that this effort spent on reviving the local stock market has a bigger underlying purpose. With Singapore's rapidly ageing population, presumably getting less prone to taking risks as a result, a lot of savings are now locked in fixed deposits.
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While less risky, the rates of returns need to be higher and investing in equities is an obvious way to help. “We are all living longer, and we need to make sure we can sustain our quality of life,” says Lang.
Read more about the equities market review group:
- 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)
