Revitalising Singapore’s stock market

Singapore moves to revitalise its stock market, but initial measures do not address fundamental issues

Singapore’s stock market has long been viewed as “boring”. Although well-regulated and featuring a stable array of dividend stocks, the Singapore Exchange (SGX) struggles to position itself as a hub for innovation or growth. Market depth is modest compared to the New York Stock Exchange, Nasdaq, and Hong Kong Exchanges & Clearing (HKEX). Even regional exchanges in Bangkok, Jakarta and Kuala Lumpur are more dynamic.

Last August, the government established an equities market review group to explore solutions for rejuvenating the stock market. The group announced its initial set of measures in February, with further recommendations expected by year-end.

Singapore’s challenges are multi-faceted. Global trading has increasingly become cross-border. In the last two years, average daily trading volume on SGX was S$1 billion-S$1.5 billion (US$740 million-$1.1 billion), trailing HKEX’s $15 billion-$20 billion and only a fraction of Nasdaq’s $300 billion.

Regionally too, SGX lagged behind Thailand’s $800 million-$1.2 billion daily turnover, and barely outpaced the Indonesian and Malaysian stock markets.

Thin liquidity and low trading volumes are compounded by limited short-selling mechanisms for price discovery. This not only discourages foreign investors, high-frequency traders and hedge funds from entering the market, but also drives local retail investors to seek higher growth opportunities in US or Hong Kong stocks.

SGX struggles to attract high-growth firms like technology unicorns and biotech startups even though Singapore has a growing ecosystem of such companies. According to government data, the city state has more than 4,500 tech startups, 400 venture capital firms, and 250 incubators and accelerators. However, home-grown tech successes Grab and SEA Ltd opted to list on Nasdaq and HKEX, respectively.

SGX remains dominated by traditional sectors like finance, real estate, shipping, and commodities, with no high-profile initial public offerings in recent years. And listed firms often trade at low valuations; for example, Singapore banks command lower multiples than their US counterparts due to perceived lower growth prospects.

Heavy-weight sectors such as real estate investment trusts, shipping, and commodities are cyclical and have become less appealing in the current high interest rate environment.

Dual oversight by the Monetary Authority of Singapore (MAS) and SGX RegCo, the regulatory arm of SGX, has been criticised as slow and sometimes bureaucratic, often delaying IPOs. Furthermore, the bourse’s merit-based approach and stringent listing requirements deter startups and special purpose acquisition companies.

Increased delistings

Meanwhile, Southeast Asia’s growth narrative is being overshadowed by China-US tensions, which pushes capital toward “safe” markets like the US and Japan.

As of end-2024, Singapore’s stock market capitalisation stood at $700 billion, placing it in 20th spot, well behind Hong Kong, which was fourth with $4.2 trillion. The figure has remained stagnant since 2000, falling far short of Singapore’s ambitions to be a global financial centre.

As a result, SGX has seen an increasing number of delistings, with companies choosing to privatise or re-domicile to other markets at a rate that outpaces new listings. Between 2020 and 2024, the bourse saw a net loss of 54 companies, with 93 delistings and only 39 new IPOs. Eight companies have already announced plans to delist thus far this year, while there has been only one IPO.

By contrast, Hong Kong recorded a net gain of 288 companies from 2020 to 2024, with 524 IPOs and 236 delistings, despite being caught in China-US tensions. Additionally, Hong Kong’s IPOs raised an average of $270 million each over that period, dwarfing Singapore’s average of $50 million.

New measures

Chee Hong Tat, deputy chairman of MAS, framed the new measures he announced in February as incentives to strengthen Singapore’s ecosystem for company development and make the stock market more attractive for both local and regional companies. The goal is to position SGX as a credible platform for raising capital for sustainable growth and maintaining long-term investor interest.

The measures have drawn cautious optimism from industry experts, but many argue bolder actions are necessary.

As the centrepiece of demand-side measures to boost investor interest, MAS will launch a S$5 billion equity market development programme to allocate mandates to fund managers to invest in Singapore equities. The request for proposals was issued in April and the winning bidders are expected to be announced in the third quarter.

To complement this programme, fund managers will enjoy tax exemptions on qualifying income from funds that allocate a minimum 30% to Singapore equities. MAS is also expanding its Singapore equity market grant scheme to cover pre-IPO companies, particularly mid- and small-cap enterprises, and to encourage research distribution through digital channels.

Meanwhile, the Economic Development Board will revise its global investor programme which allows entrepreneurs and business owners and their families to obtain permanent residency through investment. It will mandate new applicants establishing single family offices under the programme to invest at least S$50 million in equities listed in Singapore or on approved exchanges.

These measures should help improve institutional participation and market liquidity. But analysts question whether they can meaningfully narrow the yawning market depth with Hong Kong and the US.

Some have suggested deploying sovereign wealth fund GIC Ltd to invest in Singapore equities. But according to Gan Kim Yong, Singapore’s deputy prime minister and chairman of MAS, it is “not practical to rely on sovereign monies alone to sustain these funds and support the equity market”. In a speech at SGX’s 25th anniversary in January, he said that “any use of public funding must catalyse commercial capital to ensure sustained trading interest in our equities market over the long term”.

Tweaks versus transformation

Supply-side measures to attract quality listings include a 20% corporate tax rebate for primary listings and 10% for secondary listings subject to caps based on market capitalisation. And to encourage fund managers to list on SGX, such new listings will enjoy a 5% concessionary tax rate for qualifying income.

A S$1 billion private credit growth fund will also be launched. EnterpriseSG, in collaboration with private debt fund managers, will manage the fund’s strategy and deployment to develop Singapore enterprises and nurture potential IPO candidates.

The tax breaks are competitive for targeting local and regional SMEs. However, they may not be an important consideration for tech unicorns when they have a choice to list on marquee exchanges that offer greater visibility and upside in valuation.

Meanwhile, SGX RegCo will now assume the role of sole regulator for IPOs. It will shift to a disclosure-based regime rather than relying on merit-based judgement. Prospectus requirements will be significantly streamlined, and IPO approvals, which can now take four to six months, will be expedited to six to eight weeks.

Post-listing, SGX RegCo will refine oversight of disclosures, trading alerts and trading suspensions to minimise unintended impacts on trading and liquidity while preserving necessary safeguards.

The new measures underscore Singapore’s prudent approach to market reform. However, they resemble policy tweaks rather than the bold transformation needed to address structural challenges.

The path forward demands difficult strategic choices, such as whether or not the SGX should specialise as the listing hub for Southeast Asia SMEs and family-owned firms, leveraging Singapore’s reputation for neutrality and governance. Other questions include whether or not it should compete for tech listings through a dedicated innovation board and dual-listing partnerships with Nasdaq, or lead in environmental, social and governance finance to create Asia’s premier sustainable investment marketplace, modernise accessibility with fractional shares and digital platforms to engage younger investors, or pursue scale through mergers or alliances with regional exchanges.

SGX’s ultimate challenge transcends short-term incentives: it must convince companies and investors that Singapore isn’t just a compliant marketplace, but the right one for pursuing their ambitions.

*This article was published in Asia Asset Management’s June 2025 magazine titled “Falling short”.