Singapore Seeks to Revive Stock Market with Incentives
A Singaporean government-led review panel has put forward a series of recommendations aimed at revitalizing the nation’s stock market, which has struggled with low trading volumes and a shortage of new listings.
Among the key proposals are tax incentives to encourage more companies to list in Singapore and the expansion of investment funds that focus on domestic equities, according to a statement from the Monetary Authority of Singapore (MAS) on Thursday.
The review panel is expected to provide a detailed update on its initial recommendations on February 21, with additional long-term strategies to be unveiled in the latter half of the year.
To address these challenges, Singapore formed a task force in August 2023, led by Second Minister for Finance Chee Hong Tat, to explore ways to strengthen its equities market. The group includes representatives from MAS, state-owned investment firm Temasek Holdings, Singapore Exchange (SGX), and key industry players, with a target of submitting comprehensive proposals by mid-2024.
“This is a complex issue with no simple fixes, as global capital has increasingly gravitated towards a handful of major stock exchanges,” Chee stated. The proposed measures aim to help Singapore-based businesses gain better access to growth capital while attracting strong regional enterprises to list in the country.
Market Reaction and Outlook
Following the announcement, SGX shares declined by as much as 6.3% on Friday, marking their biggest drop in five months. The dip follows a recent rally that saw the stock reaching its highest point in 17 years.
While some market watchers had anticipated stronger backing from local funds, Chee clarified that the review panel does not recommend mandating investments from sovereign wealth fund GIC Pte or the Central Provident Fund into domestic equities. “I do not believe that a ‘pump-priming’ approach is a sustainable long-term solution,” he added.
Implications for the Market
Citigroup analysts, including Arthur Pineda, noted in a report that the absence of direct public funding could temper expectations of a rapid investment boost. As a result, Citigroup downgraded SGX shares from “buy” to “sell,” indicating that optimism over potential reforms may already be factored into current market valuations.
Singapore’s stock market has been facing lackluster trading activity, with more companies delisting than listing in recent years. In 2024, only four IPOs were recorded on the Singapore Exchange, raising a total of $34.4 million, making it one of the lowest IPO volumes in over two decades, according to Bloomberg data.
