Boosting Retail Participation in Singapore’s Stocks
The Securities Investors Association (Singapore), or Sias, will step up efforts to boost retail participation in local stocks in 2025 and build on what has been a bumper year for investors.
Invest Singapore Programme Expansion
The initiative involves taking its Invest Singapore programme to the heartlands to encourage more people to look at the market here, while helping them embark on their investment journey.
Addressing Lack of Knowledge and Previous Losses
Many people avoid stocks and bonds due to lack of knowledge or previous losses, opting for savings accounts which do not account for inflation, noted David Gerald, president and chief executive of Sias, an investor group with around 12,000 members.
Guiding and Advising Investors
He hopes that these new investors "come on board with Sias, which will guide and advise them on how best to construct portfolios that match their risk profiles and investment objectives."
Strong Performance of Singapore Share Market
The Singapore share market exceeded expectations in 2024, largely driven by strong performances from banks, Singtel and property-related stocks. The Straits Times Index has been the best performer in the region, delivering a 30 per cent return so far in 2024, despite many retail investors here shunning local stocks in favour of more exciting markets such as Wall Street.
Challenges Ahead
While the overall Singapore market did well in 2024, initial public offerings did not. Only four relatively small companies listed on the Catalist board, raising a total of S$46 million. Their combined market value was S$367 million at listing. It did not help market confidence when the largest of the four – Singapore Institute of Advanced Medicine, which listed in February – had its going-concern status flagged as doubtful by its external auditors nine months after listing.
Company Listings and Liquidity
Gerald hopes to see more high-quality listings, including larger firms with proven track records, to attract greater institutional interest and liquidity. He also wants companies to consider secondary listings or the Singapore Depository Receipts framework. The latter allows investors to buy shares of foreign companies on the Singapore Exchange (SGX) without needing to deal with overseas markets directly.
Improving Stock Market Liquidity
Wilson Ng, equity analyst at Morgan Stanley, noted that while Singapore has done well in areas such as banking, wealth management, commodity and foreign exchange trading, private equity and credit, it is missing a vibrant stock market, ranking 23rd among markets globally in terms of market value. New initiatives to revitalise the market are expected to be unveiled in phases in 2025.
Boosting Stock Trading Liquidity
"We believe new measures will focus on improving stock trading liquidity likely through an injection of capital (possibly from the national pension scheme, Central Provident Fund), and valuation multiples could rise as much as around 20 per cent to narrow the gap to global peers," said Ng.
Conclusion
The Securities Investors Association (Singapore) aims to boost retail participation in local stocks in 2025 and build on what has been a bumper year for investors. The association will take its Invest Singapore programme to the heartlands to encourage more people to look at the market here, while helping them embark on their investment journey.
FAQs
Q: What is the Securities Investors Association (Singapore) doing to boost retail participation in local stocks?
A: The association will take its Invest Singapore programme to the heartlands to encourage more people to look at the market here, while helping them embark on their investment journey.
Q: Why do many people avoid stocks and bonds?
A: Many people avoid stocks and bonds due to lack of knowledge or previous losses, opting for savings accounts which do not account for inflation.
Q: What is the goal of the association’s initiative?
A: The goal is to guide and advise new investors on how best to construct portfolios that match their risk profiles and investment objectives.
Q: What is the current state of the Singapore share market?
A: The Singapore share market exceeded expectations in 2024, largely driven by strong performances from banks, Singtel and property-related stocks.
Q: What are the challenges facing the Singapore stock market?
A: The challenges include a lack of high-quality listings, low trading liquidity, and the prevalence of "lowball" offers in privatisation attempts.
