(Jan 23): Singapore has started handing out part of the $5 billion (US$3.9 billion) it plans to invest in local stocks to selected fund managers, in a bid to cement an equity market revival.
JPMorgan Asset Management, Temasek Holdings Pte Ltd-backed Avanda Investment Management Pte Ltd and Fullerton Fund Management Co are among the first to use government cash to anchor new funds backing listed Singaporean companies. The three were awarded a combined $1.1 billion from the Monetary Authority of Singapore (MAS) as part of the first tranche of its Equity Market Development Programme (EQDP).
The programme, designed to help boost the vibrancy of Singapore’s $1 trillion equity market, may support a rally that has brought the benchmark stock index to a record high. The MAS set up a government-led task force in 2024 to find ways to bolster the market after years of poor liquidity and delistings outnumbering new listings.
Singapore’s efforts mirror revamps that have taken place elsewhere in Asia, from Japan to South Korea and India. Governments and regulators have hurried to implement structural reforms, in part to counter the threat that US trade policies pose to economic growth and corporate earnings.
“It is good timing for us to do something like what we are doing here in Singapore,” Ng Kok Song, a founding partner of Avanda, said in an interview. “Sometimes, for measures like this to work, you need to have the wind behind your back. I think the wind is currently supporting the move to the Asian markets.”
Under the programme, the MAS will invest in strategies of Singapore-based asset managers that have a strong focus on local equities. Funds should be able to draw in interest and capital from other commercial investors, the central bank has said, without elaborating on fundraising expectations.
See also: Temasek and GIC's returns 'reasonable' and 'within expectations'
Singapore’s stock market has shown signs of a revival, against the backdrop of a global rally. The benchmark Straits Times Index (STI) rose 23% in 2025, its best annual gain in 16 years. Initial public offerings (IPOs) raised the most in six years, according to calculations by Bloomberg.
Still, not everyone has high expectations for the programme.
See also: Heng Swee Keat steps down as director of MAS
“The Singapore market, because of the MAS’ EQDP, has led to a rediscovery, but there will be no new falling in love,” said Gerard Lee, a retired fund management industry veteran, who is now the non-executive chairman of the Singapore unit of Arabesque AI Ltd. “After this, I think at best we can hope for a plateau.”
In a survey of more than 60 Singapore-based fund managers and asset owners that manage over US$35 trillion globally, only 7% believe the STI will see at least 10% gains this year, with a majority predicting it will end 2026 up 5% to 10%. That compares with a majority of respondents who see the S&P 500 advancing more than 10%, the Investment Management Association of Singapore survey showed.
Nevertheless, there are hopes that the initiative will boost smaller equities, which have underperformed the large caps that make up the STI. The EQDP will favour funds that have a higher allocation towards such stocks, without specifying a minimum percentage requirement.
Avanda, which Ng said had about US$8 billion in assets and an annualised gross return of 8% as of July 2025, launched its fund in October. The Avanda Singapore Discovery Fund aims to allocate half of its portfolio to small- to medium-sized companies, and targets as much as 15% absolute returns within five years, the fund has said.
“For the first time in a very long time, you see that rally across market caps, across sectors,” said Shawn Ang, who manages Fullerton’s Singapore Value-Up fund.
Fullerton launched its fund in October, and it now has more than $400 million. It seeks to allocate 30% of its assets into small- and mid-cap stocks, though the percentage may vary from time to time depending on liquidity considerations.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
Fullerton said the maximum it can hold in any stock is 22% of the portfolio. The fund’s top five holdings are large-cap stocks, with more than 20% allocated to DBS Group Holdings Ltd, according to its November factsheet. The fund has seen a 12% three-month return so far, compared with the STI’s 11%.
“Return begets liquidity,” Ang said in an interview. “When that happens, it will attract more IPOs into the market.”
Singapore Exchange Ltd’s (SGX) daily liquidity of around $1.5 billion falls far short of several markets in the region. The Hong Kong bourse has a daily trading value of about HKD250 billion, while India’s is around INR1.3 trillion.
As part of efforts to improve affordability and liquidity, the local bourse has said it plans to reduce the board-lot size of securities priced above $10 from 100 units to 10.
Unlike Fullerton and Avanda’s Singapore-only funds, JPMorgan’s strategy is to allocate half of its fund to local equities and rest to Asia excluding Japan. The fund, which launched last week, aims to allocate as much as 50% of its Singapore pie to small- and mid-cap companies.
Changqi Ong, who manages the fund with Pauline Ng, said he continues to see opportunities in the non-large cap stocks as their valuations are not as stretched.
While the EQDP is a good catalyst, a structural change, through efforts such as the new “value unlock” initiative to boost shareholder returns, is needed to sustain the momentum, said Chan Kum Kong, SGX’s head of capital market development.
“The EQDP is not the magic bullet that is going to address the whole problem,” said Avanda’s Ng, a former chief investment officer of the nation’s sovereign wealth fund GIC Pte Ltd. “But it’s an important one.”
Uploaded by Tham Yek Lee
