Revitalising Singapore’s equities market is “not an easy task”, says Chee Hong Tat, Minister for Transport, Second Minister for Finance and the deputy chairman of the Monetary Authority of Singapore (MAS). Chee was speaking at the Securities Investors Association Singapore’s (SIAS) 25th anniversary corporate governance conference on Sept 16.
Chee is also the chairperson for the new review group launched to strengthen Singapore’s equities market. On Aug 2, MAS announced that it is establishing the group to revive the market within a year. The group, which comprises 10 leaders from the public and private sectors, held its first meeting on Aug 19. The meeting unveiled 31 members in its two workstreams.
Acknowledging global headwinds and rising competition, Chee emphasised that not all the ideas proposed by industry stakeholders may succeed. Nonetheless, the group is prepared to take “some calculated risks” because, as he stated, “if we don’t try, our chances of success [are] zero”.
In his speech, Chee highlighted the importance of a strong equities market as it provides a venue to facilitate successful initial public offering (IPO) exits. Such exits allow private equity and venture capitalist investors to recycle capital into other startups and early-stage growth companies, which completes a “virtuous cycle of growth, innovation and a more vibrant financial market”.
“This is why the government is considering policy measures and incentives to improve Singapore’s equities market and enterprise financing ecosystem. These are important elements of our business ecosystem to support a competitive economy,” says Chee.
“Our objectives are clear; to develop an equities market that provides an attractive venue for local and regional enterprises to access funding and support for their innovation and expansion plans,” he adds.
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Areas where the Singapore market can add value
The review group will focus on Singapore’s strengths and identify areas where the local exchange can provide value, says Chee.
Beyond Singapore’s status as a leading REIT hub and the largest REITs market in Asia ex-Japan, Chee suggests that the local market can also be a “trusted venue” to drive investor flows into mid-sized regional companies. These companies can enjoy a “better brand and investor familiarity” within their own backyard instead of listing in a larger global market. After all, being a big fish in a smaller pond can be a “more attractive value proposition”, he adds.
The review group is also looking at ways to encourage the pipeline of quality listings. With over 4,500 tech startups, 400 venture capital firms and 240 incubators and accelerators in Singapore, Chee hopes that the companies that are already based in Singapore can consider listing on the local bourse.
“We will look at the incentives to encourage listing, and to reduce the costs of listing to lower entry barriers,” he says.
“There is also scope to explore attracting growth companies from emerging markets, in certain niches such as in fintech & innovation and sustainability. Such companies could benefit from raising capital in a trusted and open market venue like Singapore,” he adds.
Another focus is catalysing the secondary private fund sector to better support late-stage startups before they consider an IPO. This suggestion comes amid the current venture capital funding winter where more start-ups are listing before they are “ready for the scrutiny of public markets”, observes Chee. “These companies are looking for alternative markets to maximise the valuation for their investors who are seeking exits.”
To further boost the equities market, the group is looking to expand research coverage of targeted sectors before and after they go public.
“Research provides visibility and bridges information asymmetry, helping companies attract investors and capital. It also generates investor interest and supports their decision-making when these companies are ready to transit from being privately-held to publicly-listed,” says Chee.
In addition, the group is seeking to expand market liquidity in counters other than the 30 large-caps that make up the benchmark Straits Times Index (STI).
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Some of the ideas include incentivising market makers to facilitate price discovery, broadening stock indices and expanding the pool of equity market derivatives, says Chee.
Finally, the group is looking to re-evaluate Singapore’s regulatory structures and approach.
“Over time, additional rules and safeguards have been introduced to protect investors, mitigate risks and uplift market practices,” says Chee. “The moves were made with good intentions, but with the passage of time and with new technological and industry developments, we need to ask ourselves if all of these rules and regulations are still relevant and required.”
“And if we need to change, we must have the courage to take some risks and make the changes,” he adds. “The review group will take a careful look at our regulatory regime, and where necessary, ‘prune’ regulations that may no longer be necessary or pose disproportionate regulatory burden.”
For instance, the group has suggested streamlining the prospectus disclosure requirements to lighten the compliance burden for companies listing on the Singapore Exchange S68 (SGX), Chee reveals. This will help sharpen the focus on material disclosures and disclosure quality, he adds.
