COMPANIES should not be obliged to list on the Singapore Exchange (SGX), said Second Minister for Finance Chee Hong Tat on Friday (Feb 28), in response to Workers’ Party Member of Parliament Louis Chua’s proposal to encourage Temasek-backed companies to do so.
Chua had asked how the Monetary Authority of Singapore (MAS) plans to utilise the S$5 billion seed funding for Singapore’s new Equity Market Development Programme (EQDP), and proposed two reforms to strengthen the local equities markets.
First, noting that MAS has taken the lead on the demand side, he urged the government to do so on the supply side – by encouraging Temasek-backed companies to list on the SGX. These could include PSA International, Mandai Wildlife Group and Changi Airport Group.
This would also offer Singaporeans “a stake in the country”, he added.
Chee replied that while the government encourages listings through incentives, such decisions must still be made by companies based on commercial objectives.
“It is more important for our overall economic competitiveness to preserve Singapore’s attractiveness to the founders of these companies and the global investors who invest in them,” he added.
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Secondly, Chua called for the strengthening of corporate governance standards and doubling down on investor education, even as MAS moves towards a more disclosure-based regime and pro-enterprise regulatory stance.
In response, Chee said that Chua’s description of the regulatory approach does not “represent a full picture”. Even as regulation facilitates listings, high corporate governance standards will still be upheld.
The review group’s next phase will focus on improving shareholder engagement and enhancing avenues for investor recourse, he added. The group will take robust enforcement action against market misconduct, and enhance research coverage so investors can make better informed decisions.
“As we embark on the next phase, the review group will continue to seek feedback and work closely with industry partners to co-create solutions and strengthen our foundations to give Singapore the best chance to attract listings and grow investor interest,” Chee added.
On Feb 21, he provided an update on the first set of measures proposed by the equities market review group. A second set of measures is expected to be announced by the end of this year.
Balancing act
Chua asked if the S$5 billion would be disbursed upfront or serve as long-term liquidity support.
Chee responded that the EQDP outcomes will be assessed before further moves are decided upon.
Chua also asked how MAS will direct the funds to specific areas of the market, particularly the small and mid-cap sectors, without creating a market bubble if certain counters become concentrated.
To this, the minister said the aim is to balance commercial objectives with developmental goals, ensuring that investments deliver returns as well as support the growth of the market.
“The focus will be not to just invest in the index stocks, because those are already quite well researched and well traded, but to look for opportunities in the other stocks as well the mid-caps and the smaller companies with potential,” Chee said.
