Singapore’s status as a global financial hub is under threat due to the persistent decline of its equities market. With the number of listed companies at a 20-year low and a delisting trend accelerating, the market faces diminished liquidity, reduced retail participation, and a corporate funding gap.
Despite the Straits Times Index (STI) emerging as Southeast Asia’s best-performing index in 2024, this superficial success belies deeper structural weaknesses that is unlikely to inhibit delistings in 2025. Left unaddressed, these challenges could erode economic sovereignty, undermine financial stability, and increase reliance on foreign capital.
The situation is so critical – though some take an optimistic position – that it has prompted the Singapore government to establish an Equities Market Report Group. This group is set to publish a report in August 2025, outlining measures to enhance the local stock market and strengthen the bourse.
A thriving equities market is essential for economic sovereignty. It empowers domestic enterprises to raise capital, supports individual wealth creation, and signals economic resilience to global markets. However, Singapore’s market struggles reveal the absence of a public sector-backed liquidity foundation, leaving it vulnerable to external pressures and foreign influence. Strategic intervention is urgently needed to reverse this trajectory and restore the market’s vitality.
A sustained decline in Singapore’s equities market -– a global decline in public equity impacts mature markets, with emerging markets and certain developed countries being outliers — poses significant risks to its status as a leading international financial center. Key risk factors include:
Diminished market appeal: Decreasing numbers of listed companies and low trading volumes can deter both domestic and international investors, reducing market liquidity. The Singapore Exchange (SGX) reported a drop in listed companies to a 20-year low of 617 in October 2024, down from 782 in 2013.
Capital flight: Companies may pursue listings on more vibrant exchanges abroad, leading to capital outflows. Recent years have seen Singapore-based firms like Grab and Sea opt for U.S. listings.
Impacts on the financial services sector: A declining equities market can negatively impact related financial services, including brokerage firms and investment banks, potentially resulting in job losses and reduced economic contributions from this sector.
Reputational damage: Ongoing market decline may damage Singapore’s reputation as a robust financial hub, making it less attractive for future business ventures and investments. This could undermine confidence in the overall financial ecosystem.
Reduced investment opportunities for citizens: A contracting equities market limits investment options for Singaporeans, potentially impacting wealth accumulation and retirement planning. This has negative implications and could lead to long-term reductions in aggregate investment, productivity, and employment.
There are parallels with the economic situation in the UK. London’s equities market faces similar challenges. Despite reforms such as the Edinburgh regulatory package and prior listing adjustments, the London Stock Exchange (LSE) continues to lose listings to more dynamic markets. The shift in focus to data analytics following the $27 billion Refinitiv acquisition has diminished the exchange’s vibrancy.
Furthermore, UK pension funds invest only 4.4% of their assets domestically. This is below the global average of 10.1%, as well as developed markets like Australia (45%) and Canada (22%), further reducing market support. This lack of domestic investment threatens the UK’s economic sovereignty and underscores the need for comprehensive market reforms. In fact, London’s exploring mandatory domestic quotas signals potential policy shifts to strengthen local market participation and economic self-determination through comprehensive reforms.
Lessons from Financial Ecosystems
Singapore can draw valuable insights from various international precedents of successful equity market revitalization. Strategic interventions by the public sector have proven effective in markets across Southeast Asia, Europe, West Asia, and East Asia. Examples from Bangkok, Kuala Lumpur, Stockholm, the UAE, and Tokyo offer important lessons for Singapore in enhancing its own equity market:
In Southeast Asia, both Bangkok and Kuala Lumpur have implemented targeted initiatives to reinvigorate their equity markets, providing potential models for Singapore.
Stockholm in Europe has demonstrated how public sector support can help drive equity market growth and development.
The UAE in West Asia has also leveraged strategic public sector involvement to strengthen its equity trading ecosystem.
Tokyo’s experience in East Asia further illustrates how intentional policy actions can revitalize an equity market.
By studying these diverse international precedents, Singapore can gain valuable insights to inform its own efforts to revitalize and strengthen its equity market through strategic public sector interventions.
Bangkok, Thailand
Long-Term Equity Funds (LTFs) & Retirement Mutual Funds (RMFs):
Introduced with tax incentives to encourage long-term equity investment.
Deepened market liquidity and improved financial literacy.
Popularity drove substantial inflows, though the expiration of LTF tax incentives raised concerns over liquidity.
Vayupak Fund (est. 2003):
Expanded in 2024 with a THB 150 billion injection to boost the SET index and strengthen investor confidence.
Employs both active and passive strategies in Thai securities, focusing on solid fundamentals and governance.
Allocates approximately 50% to SET50 stocks, 40% to government bonds, and 10% to high-grade corporate bonds.
Offers two unit types:
Type A: For retail investors, with guaranteed returns of 3–9% per year.
Type B: Held by the Ministry of Finance, subordinated to Type A units.
Hong Kong
HKMA’s Exchange Fund:
Defends the Hong Kong dollar’s peg to the US dollar and maintains financial stability.
Allocates part of its reserves to Hong Kong-listed equities, supporting liquidity and investor confidence.
As of June 2023, 3.2% of HK$3.98 trillion in total assets were allocated to domestic equities.
Works with diverse external asset managers to optimise performance and adapt to market conditions.
Mandatory Provident Fund (MPF):
Contributes a steady, long-term capital flow to Hong Kong’s stock market as a retirement savings scheme.
As of March 2024, Hong Kong stocks accounted for 12.7% of total MPF assets, with at least 30% exposure to HKD-denominated risk assets.
MPF indices (e.g., FTSE MPF Hong Kong Index) focus entirely on local assets, stabilizing the market during volatility.
Balances retirement benefits with capital market support, ensuring prudent management of MPF assets.
Kuala Lumpur, Malaysia
Employees Provident Fund (EPF):
Holds about 10.42% of Bursa Malaysia Bhd’s shares (January 2025). With assets exceeding RM1 trillion, it provides market stability and confidence.
Actively allocates capital to Malaysian companies, promoting economic growth and safeguarding members’ retirement savings through a diversified portfolio.
Significant domestic equity holdings generate steady demand for Malaysian stocks and help stabilize the market during volatility.
Structural Reforms:
The KLSE introduced a tiered marketplace and enhanced capital market ecosystems, channeling capital to enterprises across all growth stages.
Stockholm, Sweden
Investment Savings Accounts (ISKs) (2012):
Simplified tax treatment and reporting for retail investors, driving a surge in IPO activity (nearly doubled between 2014–2016).
ISK accounts rose from 500,000 in 2012 to over 2 million by 2016, fuelling market participation.
Pension Fund Allocations:
Swedish pension funds strategically invest in domestic equities, offering consistent institutional support and leveraging local economic growth.
Individuals can also direct 2.5% of their pension to chosen investments, injecting additional liquidity.
First North Market:
Provides an active exchange for nano- and micro-cap firms under the Nasdaq umbrella.
Offers visibility, strong investor demand, and a recognised brand, contributing to Stockholm’s status as one of Europe’s deepest capital markets.
Tokyo, Japan
Bank of Japan (BOJ) ETF Purchase Program:
Expanded from ¥450 billion (2010) to ¥12 trillion (2020), totaling ~US$375 billion in equity ETFs.
Lowered equity risk premiums and encouraged stock issuance over bank financing.
Government Pension Investment Fund (GPIF):
Doubled its domestic equity allocation to 25% in 2014, injecting US$100 billion into Japanese stocks.
Achieved 41.41% returns on domestic equity in 2024, significantly boosting overall fund performance.
Market Impact and Drawbacks:
Tokyo’s equity values doubled, liquidity deepened, and foreign investment reached record levels.
Lower cost of capital prompted a shift from bank loans to market funding.
However, concerns include market distortions, reduced liquidity in certain segments, and increased corporate cash hoarding.
United Arab Emirates (UAE)
Abu Dhabi IPO Fund:
Backed by the Abu Dhabi Investment Authority (ADIA), it spurred a 30% rise in ADX-listed firms from 2018–2023.
Attracted listings through regulatory reforms, IPO access for free zone companies, and improved corporate governance, helping UAE markets exceed the trillion-dirham mark in 2024.
Capital Market Reforms:
Zero domestic stock transaction fees, new parallel markets for SMEs, and state-owned enterprise privatizations boosted liquidity.
Led GCC IPO activity in 2023, raising US$6 billion (58% of regional total).
Continued momentum in 2024 with 2 of the top 5 GCC IPOs in Q2.
Economic diversification and foreign ownership reforms grew FDI by 35% in 2023, strengthening the UAE’s position as a global financial center.
Finance centres across Asia and Europe have developed robust strategies to build sovereign equity markets through coordinated state action. Government support forms the foundation, with institutions like Abu Dhabi’s IPO Fund and the BOJ deploying strategic capital through sovereign wealth funds and central bank interventions. These actions establish market stability and attract broader participation.
Market structure innovation complements this foundation. Specialised venues like Stockholm’s First North and Kuala Lumpur’s LEAP Market provide growth companies access to public capital, while tax-efficient vehicles such as Sweden’s ISK and Thailand’s LTFs encourage sustained market participation from both retail and institutional investors. Strategic privatisations, particularly in the UAE, have further strengthened these markets by attracting domestic and foreign capital.
This comprehensive approach, combining sovereign support with market innovation and retail investor development through financial education and streamlined processes, has helped these finance centres build resilient equity markets that serve their economic sovereignty while remaining globally competitive.
Singapore’s Sovereign Capital Strategy
The Singaporean government maintains a strategic balance between managing sovereign investments and developing its domestic markets. Its sovereign wealth funds, particularly GIC, operate under a clear mandate to achieve strong long-term returns through global portfolio diversification, preserving and enhancing the nation’s financial reserves. This international focus ensures the reserves maintain their purchasing power across economic cycles and regions.
Singapore’s financial architecture features distinct institutional roles under clear ministerial oversight. The Ministry of Finance oversees two key investment entities: GIC, which manages foreign reserves through a globally diversified portfolio, and Temasek Holdings, which takes strategic equity positions in growth companies. The Central Provident Fund (CPF), the national pension system, operates independently under the Ministry of Manpower and is managed by the CPF Board, a statutory agency.
The Monetary Authority of Singapore (MAS), as the central bank and integrated financial regulator, maintains price stability and oversees the financial system. Through regulatory oversight and monetary policy implementation, MAS provides the foundation for Singapore’s position as a global financial center.
As of January 2025, Singapore’s key financial entities—GIC, Temasek Holdings, and the Central Provident Fund (CPF)—collectively manage significant assets under management (AUM), estimated between US$1.531 trillion and US$1.548 trillion. The Sovereign Wealth Fund Institute (SWFI) places GIC’s AUM at US$800.8 billion and Temasek’s at US$287.8 billion, while Global SWF estimates GIC’s AUM at US$847 billion and Temasek’s at US$288 billion. CPF’s AUM is estimated at US$413 billion by Global SWF and US$436.1 billion by SWFI. Separately, the Monetary Authority of Singapore (MAS) reported official foreign reserves of US$371.43 billion at the end of 2024.
This institutional separation, combined with clear mandates for each entity, creates a robust framework that balances prudent financial regulation, long-term wealth preservation, and strategic investment for economic development.
The CPF system exemplifies Singapore’s commitment to fiscal prudence. Under the Government Securities Act of 1992, CPF monies are invested in Special Singapore Government Securities (SSGS), which carry the government’s triple-A-rated guarantee.
These funds cannot be used for government spending, but are instead pooled with other government resources and managed by the Monetary Authority of Singapore (MAS) to generate long-term foreign assets. GIC, as a professional fund manager, focuses on maximizing returns from these consolidated government assets without distinguishing funding sources.
This structured system intentionally separates fiscal policy and sovereign wealth management. Proposals to redirect these funds toward domestic equities could undermine GIC’s independent, global investment approach. Instead, policymakers advocate strengthening the overall investment environment through initiatives supporting local company growth and listings.
Allocating CPF assets to the local stock market can expose the government to significant political costs. Investing retirement savings in equities risks volatility and losses, potentially eroding public trust. There are also concerns about perceived market manipulation and conflicts of interest. Increased public scrutiny of investment returns and wealth inequality issues could further complicate the CPF system.
This explains the reluctance of the government to tap abundant sovereign financial resources and its view on such a move as being unsustainable. By maintaining the current approach of investing primarily in government-guaranteed SSGS, the government avoids these potential political costs while still providing a guaranteed return to CPF members, aligning with its emphasis on stability and long-term planning.
A Path Forward
The Swiss National Bank (SNB) has pursued equity investments, allocating its part of its foreign exchange reserves to global equities. This strategic allocation has helped improve the risk-return profile of Switzerland’s exchange reserves while providing crucial market support.
This aligns with approaches adopted by the BOJ and HKMA, demonstrating how central banks can successfully integrate equity investments into its reserve management strategy while maintaining primary monetary policy objectives.
The MAS has demonstrated its ability to allocate significant funds to strategic initiatives. For example, in 2018, MAS allocated US$5 billion to its private markets program to support private equity and infrastructure managers in Singapore. Additionally, in 2022, MAS transferred S$75 billion of excess official foreign reserves to GIC. This track record sets the tone for MAS to lead future market interventions as needed. The central bank has proven it can deploy substantial resources to support key priorities and programs.
Given Singapore’s precedents of strategic market interventions, the country could consider establishing a market support fund overseen by the MAS. This fund could allocate a portion of reserves to support the equity market.
Such a fund could focus on enhancing market liquidity, attracting sustainable capital flows, and mitigating risks of economic coercion. It could support high-growth sectors, strengthen retail participation, and improve overall market liquidity through strategic investments.
As of November 2024, CEIC data indicated Singapore’s aggregate market capitalisation was approximately US$640.5 billion. A fund representing 5-10% of this, or $32 to $64 billion, could significantly boost market liquidity and investor confidence.
The investment mandate could prioritise sectors with high growth potential, such as technology, green energy, and financial services. However, the fund must balance market stimulation with the risk of distortion, implementing transparent, rules-based strategies.
While a substantial fund could provide a short-term boost and long-run liquidity, sustainable growth relies on broader factors, including economic fundamentals, corporate governance, and regional stability. This initiative should be part of a broader strategy that includes regulatory enhancements and efforts to attract high-quality listings.
According to a recent speech by its Gan Kim Yong, Singapore’s Deputy Prime Minister and Minister for Trade and Industry, the revitalisation of Singapore’s equities market hinges on:
Attracting targeted, high-quality listings, with a focus on mid-cap firms with valuations between S$500 million and S$3 billion and growth enterprises.
Sustaining trading liquidity and broadening market participation through the use of seed capital to attract more commercial capital and initiate a sustainable cycle of institutional capital flows.
Modernising regulatory frameworks to enhance efficiency and investor trust.
In the near to medium term, aggressively issuing Singapore Depository Receipts (SDRs), launching initial public offer (IPO) exchange-traded funds (ETFs), and courting secondary listings can be a strategic path to strengthen the local equities market.
SDRs are investment products that represent an interest in overseas-listed stocks, without requiring ownership of the actual shares. Priced in the safe-haven Singapore dollar, SDRs can be traded like local shares through Singapore brokers. While SDR holders are entitled to dividends and corporate actions, they lack voting rights.
Expanding the SDR offering can benefit the Singapore market in several ways. It can broaden investment opportunities, increase market participation and liquidity, and facilitate cross-border investments, reinforcing Singapore’s position as a regional financial hub. The main advantages include lower investment costs and easier access to overseas companies, though SDRs do carry risks like the potential for issuer closure.
IPO ETFs, on the other hand, are actively managed funds that invest in companies that have recently gone public. By holding a diversified basket of recent IPOs, they provide investors with exposure to early-stage growth opportunities in a simplified manner. However, IPO ETFs may have higher expense ratios compared to broad market ETFs.
While there are currently no IPO-specific ETFs listed in Singapore, the limited recent IPO activity may constrain their immediate viability. Nevertheless, there is investor appetite for diversified exposure to new listings, especially in high-growth sectors, and a supportive regulatory environment. By offering investors more avenues for diversification and international exposure through SDRs and IPO ETFs, Singapore can attract commercial capital and enhance the overall liquidity of its stock market.
Courting foreign companies for secondary listings on the Singapore bourse is a strategic move to help bolster the local equities market and leverage Singapore’s geopolitical neutrality. These secondary listings provide companies access to additional capital and liquidity, as well as a broader investor base, filling the role Tokyo once had as the leading secondary listing hub for foreign firms in Asia, with even Exxon and Disney shares trading there.
Notable examples of firms that have chosen to list on SGX as a secondary exchange include DFI Retail, IHH Healthcare Berhad, and Emperador. DFI Retail, the owner of Cold Storage and Giant supermarkets in Singapore, has its primary listing on the London Stock Exchange.
IHH Healthcare Berhad, a major healthcare provider with brands like Mount Elizabeth and Gleneagles, is primarily listed on Bursa Malaysia. Emperador, the largest brandy company in the world, became the first Philippine Stock Exchange-listed firm to have a secondary listing on SGX.
More recently, Helens International, one of China’s largest bar chain networks, debuted on SGX through a secondary listing. With a Hong Kong primary listing, it is a well-known name in the bar industry, with over 500 locations across mainland China and Hong Kong, and three branches in Singapore.
These secondary listings on SGX can increase overall market liquidity through the trading of these dual-listed stocks. By attracting reputable international firms to list on the exchange, Singapore further solidifies its position as a leading regional financial hub, offering companies access to a new investor base and additional sources of capital.
Conclusion
To safeguard its economic sovereignty and maintain its status as a leading financial center, Singapore must pursue well-calibrated, long-term strategic interventions in its equity markets. By drawing from global best practices and leveraging the expertise of its central bank and substantial foreign reserves, the city-state can build a resilient capital market ecosystem that aligns with its long-term economic ambitions while effectively mitigating external pressures.
Whether Singapore’s public sector can implement measures that reinvigorate its equities market, pivot it away from its current state of decline, and position it as a compelling venue for enterprises to raise capital at competitive valuations remains a focal point for industry stakeholders.
Singapore stands at an inflection point: it must transform its equity markets from a point of vulnerability into a cornerstone of regional financial leadership. The path forward demands more than incremental improvements – it requires bold reforms that harness Singapore’s unique position as a geopolitically neutral superconnector bridging East and West.
By leveraging its trusted status to deepen market liquidity, streamline listings for high-growth companies across continents, and strengthen market safeguards, Singapore can build an equity market ecosystem that matches its commanding role in global capital flows.
The stakes extend beyond market metrics – they touch the heart of Singapore’s economic sovereignty and its rare ability to serve as a neutral financial gateway trusted by all major powers, from China and India to the US and Europe. The time for decisive action is now, while Singapore still holds both the institutional strength and the diplomatic capital to shape market outcomes in its favour.