Singapore’s stock market has scaled new heights and beaten its average annual performance since 2020 after the central bank announced a S$5 billion (US$3.9 billion) capital injection scheme a year ago.
Total turnover on the Singapore Exchange (SGX) in February was S$38.5 billion, 30% higher than a year ago. And market capitalisation increased 25% to S$1.1 trillion from S$876.9 billion in January 2025.
The Monetary Authority of Singapore’s (MAS) capital injection, known as equity market development programme or EQDP, got a boost last month when Prime Minister Lawrence Wong announced in his budget speech that it will be increased by another S$1.5 billion.
EQDP managers also have to be able to crowd in third-party capital, which is expected to double the size of the programme to S$13 billion over time.
MAS has thus far placed S$3.95 billion with nine fund managers, including four home-grown firms, for investment strategies focusing on local equities. The next batch of managers is expected to be appointed around the middle of this year.
Most of the managers have announced their investment strategies, which show a heavy focus on small to mid-cap stocks, a segment that has traditionally been overlooked because of liquidity constraints and lack of research coverage.
Smaller stocks
Hock Fai Chan, head of equities in Singapore at Canadian asset manager Manulife Investment Management, believes that the investability of small and mid-cap stocks will improve from allocations by EQDP managers.
“This would be a very significant liquidity injection into the market, likely lifting market valuations,” he says.
Manulife launched its Manulife Singapore Opportunities Income Strategy under the EQDP on March 3.
Other fund managers who have kicked off funds under the scheme include J.P. Morgan Asset Management. The US asset manager launched the JPMorgan Singapore & Asia Equity Income Fund in January.
“By focusing on Singapore equities, especially in the small to mid-cap space, the fund aligns with EQDP’s goals to enhance investor interest in Singapore equities and attract new third-party capital,” says Changqi Ong, portfolio manager of the fund.
Two of the four local firms introduced new funds last year with their EQDP allocations.
Fullerton Fund Management launched the Singapore Value-Up Fund last October, which focuses on Singapore-listed stocks across large, mid and small-caps.
According to Shawn Ang, a portfolio manager at Fullerton, there is “deeper liquidity and renewed interest, especially in small and mid-caps”, which drew about S$472 million of net institutional inflows in the second half of last year.
The FTSE ST Mid Cap Index tracking mid-cap stocks listed on the main board of the SGX rebounded 13.5% last year after a 0.5% decline in 2024.
Avanda Investment Management launched the Singapore Discovery Fund under the EQDP scheme, also last October. The fund’s strategy fully allocates to Singapore-listed companies with a strong focus on small to mid-cap stocks, and an absolute target return of 10%-15% in the next three to five years.
A third local firm, Lion Global Investors, allocated its EQDP allocation to its existing LionGlobal Singapore Trust Fund.
“As a pre-existing retail fund…[it] provided an immediate, ready-to-deploy bridge for retail and institutional capital to participate in the market’s revitalisation,” says Erica Lau, a portfolio manager at the firm.
Meanwhile, Eastspring Investments, the asset management arm of UK’s Prudential plc, expects to launch its EQDP strategy, which combines sustainable income and capital growth, in the second quarter of this year.
Japan’s Amova Asset Management, formerly Nikko Asset Management, will launch two EQDP funds by the end of this month. They are the Singapore All Share Strategy focusing on SGX-listed companies of varying market capitalisation, and the Singapore Small Mid Cap Strategy, to focus solely on Singapore-listed small and mid-cap stocks.
The fourth local firm, AR Capital Pte Ltd, along with US asset management giant BlackRock, Inc, have not announced their EQDP plans and did not respond to questions from Asia Asset Management.
Multiplier effect
The EQDP has continued to attract “strong interest and a robust pipeline of applications from asset managers”, MAS said in a statement on February 12, when the prime minister announced the additional capital injection into the scheme.
“The expansion of the EQDP will enable more high-quality asset managers with strategies that invest significantly in Singapore equities to be funded, and also catalyse more third-party investments into the equities market,” the regulator said.
The benchmark Straits Times Index hit a record 5,000 in February though it lost ground later in the month as investors sold off bank stocks on disappointing fourth-quarter earnings, as well as global market volatility sparked by the war in the Middle East and rising oil prices.
Large-cap financial stocks have generally been performing strongly on the back of Singapore’s growing status as a global safe haven amid global geopolitical uncertainties, according to Kenneth Ong, a portfolio manager at Lion Global.
He says outperformance of large-caps attracts liquidity from global investors while liquidity in the small to mid-caps is driven by domestic investors.
“Small and mid-cap stocks ride a liquidity tailwind when large-cap stocks perform well as domestic investors take profit from large-caps and reallocate into the small and mid-cap segment, creating a liquidity waterfall,” he explains. “Additional liquidity from EQDP can support valuation re-rating of the small and mid-cap segment.”
Broader participation
The EQDP isn’t the only government scheme to boost the market. Measures such as the S$30 million “value-unlock” training grant programme launched last November to help listed companies strengthen investor engagement and sharpen their focus on shareholder value creation, are also seen as crucial to enhance the overall equity ecosystem.
MAS has also announced more funding under a 2019 grant scheme for participating research houses to expand coverage of Singapore-listed firms, especially the under-researched small and mid-cap stocks.
“These measures help improve corporate quality, research coverage, and investor engagement, which are essential for long-term market development,” Eastspring says in an email reply to questions from Asia Asset Management.
The SGX has also tied up with Nasdaq to simplify dual listings in Singapore and the US, aiming to attract growth companies in Asia with a market capitalisation of at least S$2 billion. The companies will only have to submit a single set of paperwork fulfilling regulations on both bourses. The SGX will introduce a Global Listing Board for dual listings that is scheduled to go live by mid-2026.
However, it’s still early days yet to see wider investor participation in Singapore’s stock market, according to Richard Chan, head of equities at Avanda Investment Management.
“Singapore does not have a significant weight in most equity benchmarks, hence many regional or global funds can choose to ignore. For it to be sustainable, we will need first for the local funds, endowments, private/public savings to shift a portion of their allocation back to domestic equities,” he explains.
“All said, other than managers involved in the EQDP process, the broader investor base is still staying at the sidelines.”
