The Business Times: MAS’ S$5 billion injection is strategic, sustainable solution to perk up equities market, say fund managers
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- Sep 30
- 3 min read
Updated: Oct 3
[SINGAPORE] The Monetary Authority of Singapore’s (MAS) S$5-billion Equity Market Development Programme (EQDP) is not just a short-term stimulus, but also a long-term initiative aimed at tackling the structural issues in the equities market, fund managers have said.
Speaking at a panel discussion on market reforms and returns at the SAC Capital Connect event on Tuesday (Sep 23), the panellists said the programme – launched to beef up the local asset management and research ecosystem and investor interest in Singapore’s equities market – has been designed with durability in mind, and will adapt as market conditions evolve.
Vincent Toe, managing director at ICH Asset Management, said it is a right and progressive move. “If we see how the measures were being announced, the approach has been in doses by doses.” Deploying the full S$5 billion upfront, he noted, could have been premature, as core structural issues still need to be addressed, particularly that of attracting new issuers to the market.
He added that many companies have remained hesitant to list because of the ongoing uncertainty around liquidity and valuation. However, with improving sentiment and the potential revaluation of the small and mid-cap segment, issuer interest is starting to pick up.
Boosting investor interest in locally listed equities is a major objective of the EQDP, which was unveiled in February by MAS’ Equities Market Review Group. Under the programme, MAS will invest in strategies managed by Singapore-based asset managers with a strong focus on local equities, while also broadening investor participation beyond large-cap stocks.
In July, it announced an initial allocation of S$1.1 billion to three asset managers: Avanda Investment Management, Fullerton Fund Management and JP Morgan Asset Management. A second tranche of appointments is expected by the fourth quarter of this year.
Kenneth Tang, senior portfolio manager for Asian equities at Amova Asset Management, described the programme as clinical, methodical and durable. He believes that the EQDP is well-structured, and may encompass a longer-term, phased roll-out.
“There should be more longevity and phasing-in of how this programme will be pushed out, but we can only see that much later, when we get more details,” he added. His remarks came in response to a question from panel moderator Matthias Chan, head of equities research at SAC Capital, about whether it is logical to anticipate further tranches beyond the initial S$5 billion allocation.
Kenneth Ong, portfolio manager for Asia equities at Lion Global Investors, said that the sustainability of the EQDP hinges partly on the nature of the Singapore market. He noted the unusual composition of the Singapore market – it is top-heavy with a narrow middle and a bottom-heavy segment.
This comes from the large number of small-cap stocks at the bottom and a smaller number of large-cap stocks at the top. They sandwich the narrow middle, comprising the relatively few mid-cap stocks.
He attributed this structure to the nature of Singapore’s economy, which lacks a sufficiently large domestic demand base that would enable small and medium-sized enterprises to scale domestically before expanding overseas. As a result, only a few big players can scale successfully, while many smaller companies face difficulties.
“It is strategic as a country to ensure that we have more companies who are able to fill in this mid-cap sector,” Ong said, adding that there is also a desire to have more companies headquartered in Singapore.
“There must be longevity in this strategy, and it’s actually an opportune time because the tide is turning in Singapore’s favour,” he said. While the geopolitical situation may be challenging for other countries, he noted Singapore stands to benefit from shifts in supply chains and capital flows.
