An IMGW News Report
Singapore’s Straits Times Index (STI) is poised for its best performancesince 2017, with a 15% gain this year. Yet, this success belies deeper challenges as the city-state’s equity market faces a bleak outlook. Investors lament the STI’s narrow focus, with banks dominating more than half of its weighting, compared to under 30% in 2008. Liquidity remains low, and retail investors account for just 15% of turnover, far below regional peers like India and China.
Once a bustling hub for regional listings, Singapore’s exchange has seen delistings outnumbering new arrivals. Prominent firms such as Grab and Sea have opted to list elsewhere, further diminishing diversity. Paul Chew of Phillip Securities, as reported by Bloomberg, highlighted the lack of strong mid-cap themes, questioning the sustainability of the rally.
Historical setbacks compound the issue. The collapse of Chinese ‘S-chips’ in the 2010s and a 2013 penny-stock crash eroded retail confidence, prompting stricter regulations. Today, Singapore’s daily trading volumes lag behind markets like Australia and Thailand, with most trades concentrated in the 30 largest stocks.
Acknowledging the need for reform, Second Finance Minister Chee Hong Tat is spearheading a task force to rejuvenate the market. Inspired by models like Thailand’s Vayupak Fund, the group is exploring initiatives to boost liquidity, encourage local listings, and mobilise private sector participation. Suggestions include leveraging Singapore’s social security fund, CPF, to invest more in domestic equities.
Despite these hurdles, Singapore remains a global financial hub, excelling in real estate investment trust (REIT) listings. Experts like Hugh Chung of Endowus argue that the city-state’s global exposure mitigates the impact of a struggling local market.
However, Maybank’s Thilan Wickramasinghe, also quoted by Bloomberg, warns that a thriving equities market is crucial for sustaining Singapore’s status as a financial centre. With reforms on the horizon, Singapore’s ability to adapt could yet reinvigorate its stock market, maintaining its competitive edge in the region.
