Singapore's Equities Market Programme: Who Stands to Gain?

Singapore's recently announced policies, aimed at revitalizing its equities market, have sparked interest and anticipation among investors and market participants. The $5b Equity Market Development Programme (EQDP) and other supportive measures are expected to have a significant impact on the local market, with several key beneficiaries set to gain from these initiatives. Let's explore who these beneficiaries are and how they stand to benefit from Singapore's equities market programme.



The Singapore Exchange (SGX)

As one of the key beneficiaries, the SGX is expected to gain from an increased number of listings and higher trading volumes in stocks beyond the components of the Straits Times Index (STI). The EQDP aims to revitalize the local equity market with a focus on demand-side strategies, which should translate into more listings and trading activity on the SGX. This increased activity will not only benefit the exchange but also the listed companies through improved liquidity and valuation.



Banks and Broking Houses

Banks and broking houses, such as DBS, OCBC, UOBK, and iFAST, are also expected to benefit from the EQDP. The increased trading activity and listings on the SGX should lead to higher trading volumes and commissions for these financial institutions. Additionally, the EQDP's focus on demand-side strategies may encourage more companies to list on the SGX, further boosting the business of these banks and broking houses.

Fund Management Houses

Fund management houses that have already run sizable Singapore equity-focused mandates are likely to benefit from the EQDP. The fund managers allocated under the EQDP will not be restricted from investing in index component stocks, which includes banks, real estate investment trusts (REITs), growth companies, and companies offering high-dividend yields. This should lead to increased investment in these sectors, benefiting the fund management houses that specialize in Singapore equity investments.



Investment Banking and Advisory Firms

Investment banking and advisory firms may also benefit from the equity support measures. The increased attraction for entrepreneurial companies to acquire undervalued small companies listed on the SGX could lead to more M&A activity. These firms may help these companies "inject their own profitable companies into the acquired public entity or look to privatise small companies with strong cash flow now and relist them on the exchange when the valuation multiples are higher." This increased M&A activity would benefit investment banking and advisory firms through higher advisory fees and transaction volumes.

Small- and Mid-cap (SMID cap) Companies

While there is a risk that much of the funds may get allocated to large-cap and/or index stocks, RHB added that there is a need for greater clarity on how much of the funds need to be allocated towards SMID cap companies. If the EQDP focuses on supporting SMID cap companies, these sectors could receive significant allocations. These companies may include those in emerging industries, technology, and innovative sectors, benefiting from the increased investment and support provided by the EQDP.



In conclusion, Singapore's equities market programme is expected to have a significant impact on the local market, with several key beneficiaries set to gain from these initiatives. The SGX, banks and broking houses, fund management houses, investment banking and advisory firms, and SMID cap companies are all likely to benefit from the EQDP and other supportive measures. As the programme unfolds, investors and market participants should keep a close eye on these beneficiaries and the opportunities they present.