The Monetary Authority of Singapore (MAS) Equity Markets Review Group announced its first set of measures on Thursday (February 13), proposing tax incentives to stimulate more companies to list and invest in the local stock market.

These measures include offering tax benefits to attract businesses and fund managers to list in Singapore. They also aim to encourage the launch and development of funds that invest significantly in local stocks.

The review group, established in August last year, is chaired by Chee Hong Tat, Senior Minister of State for Finance and a member of the MAS Board of Directors. The group also includes private sector stakeholders and public sector representatives.

Its focus is on enhancing the competitiveness of the stock market through a series of proposals to spark investor interest, increase the supply of high-quality listed companies, and streamline the regulatory process for initial public offerings (IPOs).

Access to Growth Capital

"The review group's focus is on strengthening the competitiveness of our ecosystem to promote the sustainable development of Singapore's stock market," said Chee, adding that this is a "challenging task with no simple solutions," as a significant portion of global capital is concentrated in a few major stock exchanges, such as Nasdaq and the New York Stock Exchange.

He added, "We have been in discussions with industry stakeholders and have developed a series of measures aimed at helping Singapore companies access growth capital and attracting high-quality companies with regional influence to list in Singapore."

These companies include medium-sized enterprises that may not yet be ready for major capital markets but can use Singapore as a starting point to raise funds. They also include companies already listed elsewhere but interested in a secondary listing in Asia.

However, some market observers believe that tax incentives do not address the "fundamental issues" facing Singapore's market.

But he added, "The notion that Singapore lacks liquidity is incorrect."

He stated, "The recent strong performance of local banks shows that if companies perform well, Singapore investors will provide ample liquidity."

Carmen Lee, Head of OCBC Investment Research, believes that "streamlining the regulatory process" would be a positive move, as it could reduce the complexity and length of the regulatory process.

However, she noted that a company's decision to list depends on many factors—including pricing, valuation, the presence of other meaningful companies in similar industries, and trading liquidity—which must also be considered to "add vibrancy to the market."

S Nallakaruppan, President of the Society of Remisiers (Singapore), called the first set of proposed measures "a good initial step."

He said, "The goal of encouraging more funds to invest in our stock market and stimulating more companies to list is a step in the right direction."

He added, "We need a deeper capital market and a broader investor base, including institutional investors, hedge funds, and retail investors, to ensure an effective price discovery system."

Involvement of GIC and CPF Board

Some market participants have also suggested that sovereign wealth fund GIC support the local stock market. However, Chee stated that the review group does not recommend requiring GIC or the Central Provident Fund (CPF) Board to invest their funds in domestic stocks to inject trading liquidity.

He noted, "GIC's mission is to preserve and enhance the international purchasing power of Singapore's reserves."

He explained that the funds managed by GIC serve national critical objectives, and the sovereign wealth fund should be allowed to make investment decisions in a professional and commercial manner.

If such investments result in lower overall returns, GIC should not be required to allocate a specific portion to local stocks, as this would not be in the best interests of Singapore and its people.

Chee added, "I also do not believe that this 'injection of funds' approach is sustainable. A more effective approach is to examine how to strengthen the fundamentals of our market ecosystem, which is the focus of the review group."

Next Update on February 21

The review group's first set of measures will be followed by a more comprehensive update on February 21.

The group will also continue working on the next series of measures to promote the long-term development and sustainable growth of Singapore's stock market, which will be proposed in the second half of 2025.

The first set of measures has been submitted to Prime Minister and Finance Minister Lawrence Wong.

The review group stated that it has engaged with a wide range of stakeholders in the capital market ecosystem to gather feedback and ideas.

It is supported by two workstreams. The Enterprise and Market Workstream focuses on methods to encourage listings, increase investor participation, enhance trading liquidity, and promote fair valuation of listed stocks.

Meanwhile, the Regulatory Workstream aims to streamline Singapore's regulatory framework, improve the listing process, and enhance the effectiveness of the current disclosure system. It also seeks to strengthen corporate governance standards, investor access, and recourse.