Mr Chua Kheng Wee Louis (Sengkang): Chairman, as late as May 2024, I asked the Prime Minister about the Government’s assessment of the adequacy and effectiveness of existing measures to increase the attractiveness of the Singapore equities market, and whether the Government will take the lead in promoting our equities market by encouraging the privately-owned companies in which it holds equity through its investment vehicles to list in Singapore.
Back then, Prime Minister Wong responded that notwithstanding the Government’s efforts, the conditions remain challenging for the Singapore equities market, as they are for stock exchanges in many other countries, and that we have to be realistic about what we can do to change them. It was a disappointing response, but I was comforted to hear in August 2024 that the Monetary Authority of Singapore (MAS) has set up a Review Group to recommend measures to strengthen equities market development in Singapore.
Chairman, capital flow is more mobile and global than ever, seeking the best return wherever it may find. Our measures must be bold enough to bring our equity markets into the future, in order to give us the best chance of success.
I welcome the measures announced thus far but have some clarifications for the latest measures announced in February 2025.
On the launch of the $5 billion Equity Market Development Programme ddressing demand issues, it is a case of better than nothing. As we all know, the Government has long held that directing GIC to invest in locally-listed firms is “not the solution” to improve the attractiveness of the local equity market and its mandate specifically excludes the Singapore market. This is unlike Malaysia’s Employees’ Provident Fund (EPF), which is the largest investor in its domestic market, supporting Malaysian companies’ capital needs and the economy as a whole.
In the grand scheme of things, $5 billion is just a small fraction of the free-float market capitalisation of the Singapore market. How does MAS intend to use this seed funding to draw in investments from other investors? Moreover, the number of Singapore-focused equity funds have dwindled over the years. Singapore represents just a small percentage of the Asia ex Japan and World indices. How does MAS intend to evaluate and allocate the funds to the fund managers, and how will these funds be disbursed? Will there be sustained funding and cash injections for continued support of the equities market over the medium to long term?
I also wish to propose two key reforms to ensure long-term sustainability.
While MAS has taken the lead on the demand side with the Equity Market Development Programme, on the supply side, I urge the Government, via its investment entities, to similarly take the lead for its companies to list on the Singapore Exchange (SGX). This has been done before, through the listing of various Government-linked companies in the early years. Even the Singtel Special Discounted Shares Scheme in 1993, aimed at making Singapore a share-owning society by giving Singaporean CPF members the opportunity to buy discounted Singtel shares. For all intents and purposes, the scheme worked well.
We can give this current generation of Singaporeans a stake in the country via a meaningful Initial Public Offering (IPO) of the next wave of various private companies held by Temasek and encouraging them to list on the Singapore exchange. Top of mind is PSA International, which pulled the plug on its IPO in 2002 after years of preparation and this plan was never revived. Recently, Saudi Global Ports, in which PSA co-owns, is said to be aiming for an IPO worth up to US$1 billion in Riyadh too. Many families are excited to visit the new Mandai boardwalk and the upcoming Rainforest Wild Park. I am sure many will be excited to own a part of Mandai Wildlife Group. Especially when we are looking at the long-term expansion of Changi Airport and Terminal 5, tapping the global capital markets is a key avenue in which we can fund Changi Airport Group in an efficient and sustainable manner.
More importantly, as MAS moves to move towards a more disclosure-based regime and a supposed pro-enterprise regulatory stance, it is imperative that we strengthen corporate governance standards and double down on investor education.
In 2023, Japan introduced what The Financial Times called a radical “name and shame” regime to drive better corporate governance and stock market valuations, particularly at listed companies with a price-to-book ratio of less than one. Corporate reform since March 2023 following Tokyo Stock Exchange’s directive for all companies to take “Action to Implement Management that is Conscious of Cost of Capital and Stock Price” has led to almost 90% of companies taking some kind of action by end-2024.
Similarly, since 2024, South Korea has also started to tackle the “Korea discount”. Singapore can certainly take a leaf or two from them, by focusing on broad-based corporate governance reforms and implementing our own “value up” programme. This will go hand in hand with a disclosure-based regime and address longstanding concerns on corporate governance.
Further, Singapore investors, especially retail investors, need to be better equipped to make sound investment decisions and to question the board and management teams of the companies they have invested in. This can only happen with a purposeful effort to strengthen investor education and empower retail investors to make informed investment decisions in a “buyer beware” regulatory regime.
Chairman, we need to do all we can if we want to revive our equity markets and this is our best chance, maybe our only chance.
The Second Minister for Finance (Mr Chee Hong Tat): Madam, with your permission, I will address both cuts for MAS and take clarifications after this reply if there is available time. Let me start with Mr Louis Chua’s cut on the equities market.
A key challenge which many exchanges face is that global capital is heavily concentrated in the US and US-listed stocks currently account for around two-thirds of global stock market capitalisation.
The Review Group is clear about our objectives and realistic about our goals. Based on industry consultations, there are companies with a strong presence in Singapore and the region that might not be large enough to sustain investor interest post-listing if they were to list in the US. These companies represent one key segment we could attract. The Review Group focused on strengthening the elements of our ecosystem to enhance its competitiveness and provide a well-functioning market for companies, including technology startups, to raise capital for their expansion.
The first set of measures span three mutually reinforcing pillars covering demand, supply and regulations. On demand side, we introduced measures to increase investor interest and deepen trading liquidity, such as the launch of a $5 billion Equity Market Development Programme (EQDP).
On the EQDP implementation, MAS will start evaluating eligible fund managers and strategies in the next few months. The EQDP will invest in a range of funds with a focus on Singapore stocks, including non-index component stocks. These funds will be managed by fund managers with strong investment track record and capabilities in Singapore. The fund strategies should be actively managed and commercially viable to attract capital from other investors. MAS has experience in running programmes with both investment and market development objectives, and this is an extension of our approach in developing fund management capabilities in Singapore.
The feedback from the industry, so far, has been more encouraging than how Mr Chua has described it. He said, “better than nothing”. I think other industry participants and stakeholders have given more positive comments about this move. But whether it works or not, let us see. We will do our best and see whether this will help to grow the local fund management industry and also attract more investor liquidity.
Madam, the Government and SGX will continue to encourage companies to list in Singapore, and we have recently introduced tax incentives for this. However, listing decisions will be made by the companies based on their commercial objectives. We should allow this and not impose requirements for the companies to list on SGX, as it is more important for our overall economic competitiveness to preserve Singapore’s attractiveness to the founders of these companies and the global investors who invest in them.
On the regulatory front, Mr Louis Chua’s description of the Review Group’s approach does not represent the full picture. I hope this is not deliberate as it would otherwise be rather unfair to the Review Group and our workstream members, who include eminent industry leaders, such as Mr Neil Parekh.
Madam, the Review Group has recommended taking a regulatory stance that is both pro-enterprise and pro-investor confidence. While regulation will be more focused and facilitative of listings, we will continue to uphold high corporate governance standards. We stressed this a couple of times during our media conference and also in our reports. The Review Group also said that in the next phase of our review, we will look at initiatives to uplift companies’ capabilities in shareholder engagement and sharpen their focus on shareholder value. We will enhance avenues for investor recourse and will take robust enforcement action against market misconduct. In addition, research coverage will be enhanced, to support investors to make better informed investment decisions.
As we embark on the next phase, the Review Group will continue to seek feedback and work closely with industry partners to co-create solutions and strengthen our foundations to give Singapore the best chance to attract listings and grow investor interest.
The Chairman: Clarifications? Mr Louis Chua.
Mr Chua Kheng Wee Louis: Just a few clarifications for the Minister. Firstly, I look forward to the next phase of the review. Hopefully, we will have our own value-up programme.
Specific to the Equity Market Development Programme, I asked whether there will be sustained funding and cash injections for continued support of the equities market over the medium- to long-term. Just to get a sense of this $5 billion in terms of, are we looking at something upfront? Is this something that will be providing continued liquidity support over the medium- to long-term for it to be sustainable?
Second, the Minister mentioned the direction towards non-index components. In terms of the actual implementation, how does the MAS plan to ensure that the funds are directed to the Singapore markets, specifically to this area that the Minister mentioned? And at the same time, given the current liquidity of the small mid-cap space, ensure that there is not a subsequent bubble or even a popping of the bubble if, let us say, certain counters became concentrated?
Lastly, I think the Grant for Equity Market Singapore Research Talent Development Grant previously was actually focused on and at the same time developing local research talent. With the Equity Market Development Programme, is there also a similar requirement to develop the local fund management talent?
Mr Chee Hong Tat: Madam, the EQDP is a programme that we will start. We will assess the outcomes before we decide on whether there will be further moves. As many industry players have noted, this is a good start. It will help to develop our local fund management industry.
As to the specifics of how we design it, I think MAS has explained it. We do want to set a focus on the local equities market, for these funds to focus on the local equities market. Not to just invest in the index stocks, because those are already quite well-researched and well-traded, but to look for opportunities in other stocks as well – the mid-caps and the smaller companies with potential.
But all this, as I mentioned in my main reply, would have to be done commercially, because at the end of the day, you still want to balance that objective of having investment returns with a development objective.
GEMS. Yes, I think I mentioned this or the Review Group mentioned this in our announcement as well. We will also look at how we can support the research ecosystem. This is an important part of the effort to be able to raise awareness amongst investors and also to have more information about the companies be made known.
Prime Minister’s Office
28 February 2025
https://sprs.parl.gov.sg/search/#/sprs3topic?reportid=budget-2576
Office of the Leader of the Opposition 