SG explores seed capital to strengthen equities market

SGX’s stringent regulatory approach and lower valuations have led many companies to prefer listing on Bursa Malaysia. / Photo credit: The Business Times

The Monetary Authority of Singapore’s (MAS) equities market review group is exploring ways to optimize the use of seed capital to attract more commercial investment.

This approach aims to ensure that government developmental funds are deployed in a fiscally responsible manner, Minister for Trade and Industry Gan Kim Yong said.

He made these remarks at the Singapore Exchange (SGX) Group’s 25th anniversary ceremony on Thursday, which also marked the first trading day of the year.

“While there have been suggestions to channel sovereign monies into our equities market, it is not practical to rely on sovereign monies alone to sustain these funds and to support the equity market,” he added.

Gan, who also serves as deputy prime minister, emphasized the need to attract sustained commercial capital – such as institutional funds, individual investors, and family offices – as a crucial step to stimulate market interest and maintain trading liquidity.

He further stressed the importance of broadening liquidity, particularly for smaller counters with market capitalizations ranging from S$500 million to S$3 billion (US$365 million to US$2.2 billion).

These recommendations come as the review group undertakes a comprehensive examination of demand-side, supply-side, and ecosystem-level measures.

“Such a holistic approach will be critical to ensuring that we can put our equities market on a stronger footing for the years ahead,” said Gan, adding that the review group is consulting widely and will share further updates in due course.

The group, established last August, aims to recommend measures to develop Singapore’s equities market. Chaired by Second Minister for Finance and MAS board member Chee Hong Tat, it includes stakeholders from both the private and public sectors.

Gan characterized the local equities market’s performance in 2024 as a “mixed picture.” While the Straits Times Index recorded its best annual performance since 2017, the market faced challenges from a lack of new listings, attributed to global economic uncertainties, high interest rates, and growing competition from regional exchanges and alternative fundraising methods.

“Collective commitment to change”

SGX chairman Koh Boon Hwee, speaking at the ceremony, stressed that addressing a range of structural and policy issues requires cooperation among SGX, policymakers, regulators, and all stakeholders in the ecosystem.

“Whether it is reforming policies to attract liquidity, or a paradigm shift in how we approach regulation, it will take courage, a willingness to take risks, and a collective commitment to change,” he added.

Meanwhile, Gan shared that the review group is working to position Singapore’s equities market as an attractive listing venue for high-quality, mid-cap growth companies that are typically overlooked by larger exchanges in the US, China, and Japan.