Who will benefit from Singapore’s equities market programme

Experts said there is still a need to clarify the investment focus of the $5b EQDP.

The Singapore Exchange (SGX) is expected to be one of the key beneficiaries of Singapore’s recently announced policies that aim to support the equities market.

According to RHB’s market outlook, the measures, which include the $5b Equity Market Development Programme (EQDP), aim to revitalise the local equity market, with a focus on demand-side strategies.

Through the policies, the SGX “will gain from an increased number of listings and higher trading in stocks beyond the stock components of the STI [Straits Times Index],” the report read.

Other beneficiaries would be the banks and broking houses, such as DBS, OCBC, UOBK and iFAST, RHB said.

RHB also expects large liquid stocks benefiting since the fund managers allocated $5b under the EQDP will not be restricted from investing in the index component stocks. This would include banks, real estate investment trusts, growth companies, and companies offering high-dividend yields.

Some of the other beneficiaries could be fund management houses that have already run sizable Singapore equity-focused mandates.

Also possibly benefiting from the equity support are investment banking and advisory firms, RHB said. This can be attributed to an increased attraction for entrepreneurial companies to acquire undervalued small companies listed on the SGX.

They may “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,” RHB said.

Meanwhile, the report also noted that clarity may be needed on the focus sectors for the announced $5b EQDP. This is “to ensure that it aligns with sectors that form the largest portion of the potential IPO [initial public offering] pipeline for the SGX.”

“We also think there is a need for greater clarity on how much of the funds need to be allocated towards the small- and mid-cap (SMID cap) companies. Without this clarity, there remains a risk that much of the funds may get allocated to large-cap and/or index stocks,” RHB added.

There was also no mention of the multifamily offices (MFO) that serve multiple families to meet their wealth management and lifestyle goals.

“If new SFO [single family offices] that plan to open offices in Singapore find the proposed modifications to the Global Investor Programme (GIP), which requires them to invest at least $50m in stocks listed on Singapore-approved exchanges, onerous, their funds may be transferred to MFOs,” RHB said.