Singapore's small-mid caps bound for growth

MAS’s EQDP is expected to attract capital beyond $5b investment.

The Monetary Authority of Singapore (MAS)’s $5b Equity Market Development Programme (EQDP) signals to the market that small-mid caps are no longer an afterthought, but now a key focus, supported by targeted policies, according to a report by DBS Group Research Equity.

According to the report, SMCs offer investors the opportunity to outperform the market. The average MTD gain of 11.9% amongst the 58 non-index stocks under our coverage exceeds the Straits Times Index (STI)’s 7.5%.

Concrete progress with the EQDP, attractive forward valuations, and improved investor sentiment should support continued outperformance relative to large-cap stocks.

The report said that the EQDP is expected to attract capital beyond the MAS’s $5b seed fund investment, representing a significant percentage of the SMC market capitalisation.

Recent interest has featured SMCs with attractive valuations, value-unlocking potential, earnings turnarounds, and/or resilient yield.

On 21 July, the first batch of EQDP asset managers was appointed, with an initial $1.1b allocated to Avanda, Fullerton, and JP Morgan Asset Management. The selection phase for the remaining $3.9b will be announced in Q4 2025 and 2026.

Funds remain relatively underinvested in Singapore equities by historical standards, despite the STI reaching all-time highs. As of 29 July 2025, the ratio of FTSE ST AllShare market capitalisation (SGD724.7bn, representing 98% of the SGX mainboard universe) to M2 ris 0.846, nearing levels last seen during the global financial crisis.