A Structural Shift in Market Dynamics
Singapore’s equity market is undergoing a fundamental transformation driven by coordinated policy initiatives from the Monetary Authority of Singapore. The Equity Market Development Programme (EQDP), expanded from S$5 billion to S$6.5 billion in February 2026, represents the most significant intervention in the local stock market in decades.
In its third round of allocations announced in September 2026, MAS allocated S$1.45 billion to five asset managers—Amundi, Franklin Templeton, HSBC Asset Management, M&G Investments, and Natixis Investment Managers—taking total commitments to S$5.4 billion.
The Liquidity Imperative
The programme addresses a longstanding contradiction in Singapore’s capital markets: the city-state manages vast pools of global money, but comparatively little flows into its own stock market. MAS wants appointed fund managers to run strategies with substantial exposure to Singapore equities, crowd in private capital alongside government funding, and build deeper pools of money for listed companies beyond the largest and most liquid names.
Early signs suggest the strategy is working. The daily average value of securities on SGX rose 35% in FY2026 to S$1.8 billion—its highest in 18 years—while total securities turnover increased by the same percentage to S$455.7 billion.
Beyond the Index
The rise in small and mid-cap turnover is arguably more important to the EQDP experiment than the headline performance of Singapore’s biggest stocks. The STI can perform strongly while smaller listed companies struggle with thin trading, limited analyst attention, and narrow institutional ownership.
For value investors, this policy-driven shift creates a dual opportunity. First, the increased liquidity and analyst coverage of mid-caps should gradually reduce the valuation discounts that have historically plagued smaller Singapore-listed companies. Second, the EQDP’s mandate to invest in Singapore-focused strategies means that undervalued companies across the market capitalisation spectrum are more likely to attract institutional attention.
The Macroeconomic Backdrop
The policy initiatives are occurring against a backdrop of above-trend economic growth. Singapore’s GDP growth rose to 5.9% year-over-year in Q2 2026, supported by AI-linked capex, resilient manufacturing, and steady financial-sector expansion. At July’s MAS meeting, policymakers reiterated that the economy is forecast to record a firm pace of growth of 4.5-5.5% in 2026, responding with a slight increase in the rate of appreciation of the policy band.
JP Morgan describes Singapore equities as offering a “three-legged equity case” of stability, earnings growth, and income, complementing Asia portfolios that are often structurally tilted towards higher-beta technology exposure.
Implications for Value Investors
The combination of policy support, improving liquidity, and above-trend growth creates a favourable environment for value-oriented strategies. The MAS initiatives are designed to revive the broader Singapore equity market, not just financial stocks, and the resulting improvements in market breadth should create more opportunities for fundamental stock selection.
For value investors, the key is to focus on companies with sound fundamentals that are positioned to benefit from improved liquidity and increased institutional participation. The policy tailwinds are real, but they reward patient capital that identifies value before it is fully recognised by the broader market.
