The Next Public Offering: Singapore Invests Billions on Reviving the SGX

By Rushil Srinath

Credit to Unsplash (Anne Nygård)

INTRODUCTION

Sea. Grab. PropertyGuru. These are just some of the Singaporean companies that have chosen to list on other stock exchanges instead of the Singapore Exchange (SGX).

In the past few years, the SGX has faced a dearth of new listings and a rising number of delistings. Many investors perceive the SGX to be “boring” and “unexciting”. This lack of vibrancy, where the SGX faces less investor attention and active trading of shares, contrasts with Singapore’s status as a thriving financial and business hub. In response, Singapore is now committing billions of dollars in an ambitious effort to revive its stock market.Why is the SGX struggling, and what is the Singaporean government doing to rejuvenate it? Find out more in this Policy Explainer.

WHY IS THE GOVERNMENT TRYING TO REJUVENATE SGX?

Importance of the SGX

The SGX is Singapore’s stock exchange, a marketplace where investors buy and sell shares of publicly traded companies, businesses that have offered ownership stakes to the public through the stock market. This marketplace allows companies to raise funds and allow investors to trade stocks. When a company conducts an Initial Public Offering (IPO), it creates new shares to sell to investors. This process allows the company to raise funds, while investors can get ownership stakes (i.e., equity) in the company in return.

A vibrant SGX is essential for Singapore, due to several reasons. First, it helps local firms easily raise money to expand their operations. If the SGX has a large pool of active investors with strong analyst coverage, there is greater awareness of and demand for newly listed firms’ shares. Firms can sell their shares at higher prices, raising more money in an IPO. Without this vibrancy, firms may be forced to raise money in foreign stock markets instead. Yet listing on foreign markets presents drawbacks. Foreign investors may be less familiar with Singaporean companies’ operations and business models, making them less confident and willing to invest. Hence, these firms’ shares may face lower demand, causing lower share prices and less money raised. Listing on foreign markets also adds complexities such as unfamiliar regulations and currency conversion risks. Also, these issues mean that local investors may find it hard to follow and invest in these companies, further reducing the pool of potential buyers.

Second, a vibrant SGX helps safeguard Singapore’s economic sovereignty. If local firms depend heavily on foreign exchanges to raise money, they become vulnerable to political tensions between Singapore and those countries. In severe cases, foreign countries could ban future listings or trading of Singaporean companies’ shares, cutting off their ability to raise funds. Local firms may hence struggle to fund expansion plans, depressing Singapore’s broader economic growth.

Third, a busy marketplace for shares supports a wide range of jobs and businesses. This ecosystem will create demand for many supporting professionals such as stockbrokers, analysts, fund managers, lawyers, and accountants. creates diverse business and employment opportunities in Singapore. The number of jobs created can be significant: New York, for instance, has over 200,000 people employed in the securities industry, which is involved in the operation of financial markets. A thriving SGX may create significant job opportunities in a similar way.

The SGX’s Recent Struggles

Despite its importance, the SGX has faced challenges recently. The number of annual new listings has declined significantly, from consistently more than 20 IPOs before 2015 to just 4 IPOs by 2024. At the same time, there has been an increasing number of delistings, which occur when firms stop listing on the SGX. As a result, the number of total listings on the SGX has fallen from 673 in December 2021 to 606 in December 2025.

Figure 1: Singapore’s shrinking stock market

There are several key reasons for these struggles.

Low Valuations and Liquidity

Many stocks listed on the SGX currently trade at low valuations, compared to those in private deals or listed on other stock exchanges. This means that firms with similar levels of financial metrics (e.g., profits, revenue, assets) trade at a lower value on the SGX compared to other stock exchanges or private deals. As of April 2025, 60 per cent of SGX-listed companies trade below book value (i.e., total assets minus total liabilities, representing what investors would theoretically receive if the company was wound up). This figure is far higher than the comparable one at 10 per cent for companies in the S&P 500 (an index of large US firms).

A related factor is low liquidity on the SGX. Low liquidity means that it is relatively more difficult to buy or sell shares quickly without majorly impacting stock price, and tends to be caused by low trading volumes (i.e., how actively shares are being bought and sold). Trading volumes on the SGX are even lower than other regional exchanges such as Bangkok’s.

Low liquidity and valuations form a vicious cycle. Low liquidity and trading volumes cause wider spreads between the price at which investors can buy or sell stocks. These wider spreads increase transaction costs and discourage investors, decreasing demand and hence prices for SGX-listed stocks. Furthermore, low valuations further reduce investor interest, contributing to lowered trading volumes.

Old-economy Focus

The SGX has a relatively conservative market culture amongst investors, which heavily emphasises a good track record of past earnings. Thus, there is less investor appreciation for high-growth firms on the SGX (which tend to sacrifice immediate profits for future growth). These companies would hence achieve lower valuations on the SGX compared to other exchanges. Trive, a venture capital firm that invests in private firms, was advised that one portfolio company’s stock valuation would be 10 times lower on the SGX compared to the Nasdaq (a US exchange). Hence, new-economy, high-growth firms would raise less money on the SGX as compared to on other exchanges. In turn, this trend prompts such firms, including tech giants like Sea and Grab, to list on other exchanges instead.

Resultingly, the SGX has been dominated by mature, slow-growth old-economy sectors such as banking and real estate. Investor interest is naturally lower for these slow-growth sectors, because slow growth is associated with a lower chance for rapid stock price rises. Hence, the old-economy concentration exacerbates the aforementioned vicious cycle of low liquidity, investor interest, and valuations.

Lack of Sustained Institutional Capital

Institutional capital refers to large-scale, professional investment funds. These funds are typically pooled on behalf of others and can take various forms, such as pension funds, insurance schemes, and university endowments. Some countries (e.g., Australia) actively direct this capital towards their domestic stock markets. For example, they may have regulations for pension funds to be invested into these stock markets.  These investments create a steady, substantial flow of money into the domestic exchange, boosting liquidity and supporting listings.

Though the wholly-government owned investment firm Temasek invests in SGX-listed companies, critics have argued that these investments are not enough.

RECENT EFFORTS

The government has implemented several solutions to address this issue.

MAS Equity Market Review Group

First, the Monetary Authority of Singapore (MAS) launched a review group in 2024 to devise recommendations to strengthen the development of the SGX. Since then, several measures have been proposed.

One proposed measure is to facilitate a dual-listing bridge between the SGX and Nasdaq. This would allow companies to concurrently list on the SGX and the Nasdaq, a US exchange. This dual-listing bridge aims to increase these companies’ access to investor bases across Asia and North America. At the same time, the SGX can benefit by attracting companies that may have otherwise been considering listings on US exchanges, such as “new-economy” high-growth firms.

Another proposed measure concerns the streamlining of listing rules. This would ideally simplify IPO requirements to make it easier for companies to list on the SGX.

Equity Market Development Programme (EQDP)

Launched in 2025 by MAS, the EQDP is a direct effort to expand institutional capital by investing in funds managed by Singapore-based asset managers that focus on SGX-listed equities. In turn, the EQDP aims to strengthen Singapore’s local asset management ecosystem and investor interest in Singapore stocks. The scale of commitment is significant. In 2025, MAS committed S$5 billion to the EQDP, and has allocated S$3.95 billion across nine fund managers as of February 2026. In the same month, MAS further expanded the EQDP by S$1.5 billion from S$5 billion to S$6.5 billion, in accordance with Budget 2026.

In turn, the EQDP aims to strengthen Singapore's local asset management, research ecosystem, and investor interest in Singapore stocks. This research aim is pursued through a selection process: in choosing asset managers, MAS weighs their commitment to expanding asset management and research capabilities in Singapore alongside the strength of their proposed strategies. In practice, the programme incentivises fund managers to expand teams of analysts to research on SGX-listed companies, developing homegrown investment talent and research coverage.

Anchor Fund

The Anchor Fund is a co-investment fund between the Singapore Government and Temasek. Its goal is to support firms when fundraising on SGX, by investing in them to support their valuations. It is a further government effort to expand institutional capital, with an initial S$1.5 billion tranche in 2022, followed by a second S$1.5 billion tranche in 2026.

However, it is important to note that the fund is not simply meant to blindly invest in Singaporean companies. Instead, it is managed on a commercial basis and aims to achieve good returns alongside supporting these local firms.

REJUVENATION OR RISK?

Relying on public funding to revitalise the stock market involves several risks and trade-offs, which range from market efficiency to fiscal sustainability.

Fiscal Dependency and Policy Sustainability

The foremost danger of using public funds to stimulate the stock market is the risk of creating structural dependency. Even if the injections see success in rejuvenating the SGX, the strategy could fail to trigger a self-sustaining cycle of market activity. While the fiscal commitment of over $10 billion thus far is significant, it amounts to less than 1 per cent of the SGX’s $1.1 trillion total market cap — the combined value of all shares in its listed companies. Investor sentiments may hence remain pessimistic, as the intervention is perceived as insignificant.

In this case, policymakers would eventually be required to choose between providing expensive, ongoing top-ups, or withdrawing support. Withdrawing support could risk a sharp market correction that could hurt retail investors (i.e., individuals who buy or sell securities on personal accounts rather than on behalf of an organisation).  Without a clear exit strategy, there is great concern that taxpayers could be exposed to unnecessary market risks if the intended rise in private investment never truly materialises, and ongoing top-ups are required.

It remains to be seen if such market mechanisms will progressively take the lead and ensure the SGX gains genuine momentum and reduces its long-term reliance on state support.

Crowding Out Effect

Furthermore, the use of public funds to stimulate the market runs the risk of displacing private activity. Traditionally, governments must borrow money to fund such plans, soaking up available loans. This leaves less loanable funds for private entrepreneurs. Without financial growth, these entrepreneurs have their growth limited, and so private activity is unwittingly pushed off the stage.

In the case of Singapore, however, the Government runs a budget surplus. While this nullifies the traditional crowding out effect, state involvement can still crowd out private activity in a different way. If the state is seen as the primary mover in the market, it can distort pricing signals. Private investors may become reasonably cautious or passive, fearing that stock prices no longer reflect a company’s fundamental value, but are instead being propped up by policy. This might reduce the diversity of independent investors, resembling the crowding out effect. 

However, to ensure that public funds act as a spark rather than a crutch, the Government employs a one-for-one matching requirement. Under the EQDP framework, selected fund managers must secure an equal amount of private third-party capital before they can deploy the public funds. Requiring this skin-in-the-game from the private sector, the strategy ensures that capital is only flowing into companies that professional investors believe are genuinely viable. The financial impact is doubled, while rectifying  the crowding out effect.

Market Inefficiency

Beyond reducing the diversity of independent investors, the distortion of pricing signals could mean that investors find it more difficult to judge which companies are truly strong. Funds may flow to weaker companies, and inefficiencies would fester as these companies raise more capital while maintaining the status quo.

To mitigate this, the Government delegates the actual investment decisions under the EQDP to professional, third-party fund managers. These managers operate with strict commercial discipline, as they risk their own reputation and their clients’ private money. Furthermore, in financial markets, key investment decisions are made through robust research on company fundamentals. Hence, the Government is pairing financial injections with measures that improve market transparency.

The Government has also expanded the research ecosystem to focus on mid- and small-cap enterprises, which are smaller listed firms as measured by market cap. These firms would otherwise receive less analyst attention than the SGX's more established names. With broader coverage, the Government aims to keep investors well-informed of lingering inefficiencies within firms to ensure efficient capital flows.

CONCLUSION

While significant capital is being deployed to rejuvenate the SGX, funding alone cannot create a vibrant market. Ultimately, its success depends on whether these measures can catalyse a self-sustaining cycle of private investment.

If effective, this initiative could help reverse the outflow of local firms seeking deeper liquidity abroad and strengthen Singapore’s position as a global financial hub. However, if market activity remains reliant on continued state support, the gains may prove temporary.

The true test, therefore, is not the scale of intervention, but whether it can eventually step back, leaving behind a market that thrives on its own.

SGX Rejuvenation Policy Explainer.pdf

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This Policy Explainer was written by members of MAJU. MAJU is a ground-up, fully youth-led organisation dedicated to empowering Singaporean youths in policy discourse and co-creation. 

By promoting constructive dialogue and serving as a bridge between youths and the Government, we hope to drive the keMAJUan (progress!) of Singapore.