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 (b) 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, PM Lawrence 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 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 S$5 billion Equity Market Development Programme (EQDP) addressing 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 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, S$5 billion is just a small fraction of the free-float market capitalisation of the Singapore market. However, how does the 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 only a small percentage of the Asia ex Japan and World indices. How does the 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 the MAS has taken the lead on the demand side with the EQDP, on the supply side, I urge the Government, via its investment entities, to similarly take the lead for its companies to list on the SGX.
This has been done before, through the listing of various Government linked companies in the early years, to 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 IPO of the next wave of various private companies held by Temasek and encouraging them to list on the Singapore stock 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.
Most importantly, as the 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 TSE’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 started to tackle the “Korea discount” with planned capital market reforms aimed at addressing low dividend payouts and opaque corporate governance structures.
Singapore can certainly take a leaf or two from them, by focusing on broad-based corporate governance reform, and implementing our own “Value Up” programme. This will go hand in hand with a disclosure-based regime, and address longstanding concerns on poor corporate governance arising from various corporate missteps in the past ranging from the S-Chip saga, to Blumont and Noble Group, among others.
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’ve 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. As CEO of SGX RegCo noted, this is “our best chance, maybe our only chance”.
