Singapore stocks: Once bitten, twice shy

[weijian]

Once there are fees to be earned, suddenly 100 GPs appear to sign up their interest in investing in local SGX small/med caps (mind you, not the large ones like the 3 banks and TLCs). This first batch of 3 GPs are all related/interconnected and suggests MAS is been conservative as it starts the EQDP. It also make sense to stagger the GP selection into different phases.

In addition to EQDP, there is also more money thrown at coming up with research pieces and listing of SDRs/ETFs on SGX (primarily giving a free ride to SGX).

Finally, consultations will happen towards the end of 2025 to collect suggestions to improve minorities protection/legal recourse. SIAS may be playing a much much bigger role in future, we hope.

MAS Appoints First Batch of EQDP Asset Managers; Commits S$50 million to Boost Equity Research and Product Listings; and Outlines Proposals to Enhance Investor Recourse

3. Since the announcement of the EQDP in February, MAS has received strong interest from the asset management industry in the programme, with indications of interest from over 100 global, regional and local asset managers. MAS is reviewing the submissions in batches to speed up the asset manager appointment and capital deployment process.

4. MAS has appointed the first three asset managers under the EQDP, and will place a combined initial sum of S$1.1 billion with them, out of the total S$5 billion that has been set aside for EQDP. The asset managers are:

Avanda Investment Management
Fullerton Fund Management
JP Morgan Asset Management

6. MAS is reviewing the remaining submissions and will appoint additional asset managers to manage the remaining funds under the S$5 billion EQDP[3]. The next phase of selection is expected to be announced by 4Q 2025. By investing with a broad range of fund managers employing varied strategies, the EQDP can leverage their distinct investment expertise and distribution networks to attract commercial capital and strengthen market vibrancy. This will help to improve price discovery and trading liquidity in Singapore’s equities market.

Additional funding of S$1,000 for each research report, with a further S$1,000 if the report is an initiation of research coverage[5] or covers pre-IPO stage and newly-listed companies. This brings the maximum funding from S$4,000 (current) to S$6,000 (enhanced) per research report[6]. This enhanced funding aims to boost investor awareness and trading interest in under-researched segments, particularly small- and mid-cap enterprises.

A new funding sleeve to cover Singapore Depository Receipts (SDRs) and foreign Depository Receipts (DR) with underlying Singapore stocks, providing S$40,000 per DR issuance. This aims to increase overall trading interest and liquidity in Singapore, while broadening the global investor base for Singapore equities.

Increasing the overall funding per primary listed ETF, from S$100,000 to S$250,000. A new funding sleeve will also support cross-listed and feeder ETFs at S$180,000 per listing. This will facilitate more ETF listings in Singapore, adding to the range of listed investment products to provide more investor choice.

10. Facilitating investors to seek civil recourse is therefore important to bolstering investor confidence, maintaining market integrity and upholding the reputation of Singapore’s capital markets. In doing so, there is also a need to address concerns of frivolous legal actions that would unduly burden the market, by putting in place appropriate safeguards. In line with the Review Group’s guidance, MAS has identified three areas of focus and will consult on proposals later this year:

https://www.mas.gov.sg/news/media-releas...t-managers

[CY09]

"Additional funding of S$1,000 for each research report, with a further S$1,000 if the report is an initiation of research coverage[5] or covers pre-IPO stage and newly-listed companies. This brings the maximum funding from S$4,000 (current) to S$6,000 (enhanced) per research report[6]. This enhanced funding aims to boost investor awareness and trading interest in under-researched segments, particularly small- and mid-cap enterprises."

Anyway Valuebuddies can amalgamate our threads for many of our SGX listed companies into 01 research report : ). We have so many information on small mid/small cap companies, easily can monetise the 4k-6k per research reports

On the other hand, the consultation on protecting minority interest is a good avenue and I hope knowledgable members here can submit to MAS views/recommendations. MAS is rather transparent on the pointers it receives and it will elaborate why their final paper dont support or support it

[opmi]

Incentives lead to increase in quantity of reports. How to verify the quality of the reports?

https://www.corporate-rebels.com/blog/leaders-rules

[Dosser]

Market has been steadily climbing for a month, also seeing strength in the non-index stocks. Apart from the MAS angle, suspect a lot of it is due to the precipitous fall in T-Bill yield. Decent dividend paying stocks are looking relatively much more attractive, although the option of topping up the other half's CPF retirement account is  also tempting.

[weijian]

Incentives lead to increase in quantity of reports. How to verify the quality of the reports?

https://www.corporate-rebels.com/blog/leaders-rules

Whether sell-side or buy-side reports, and regardless of the quality of those reports (which is unfortunately quite subjective for a start), I suppose that the net effect will contribute towards making the Spore equity market less inefficient.

As an investor, do we prefer more efficient or more inefficient markets? Of course, perennial inefficiency is not that desirable because been right early and wrong are not quite dissimilar. An investor of inefficient markets only make their risk-adjusted gains when Mr Market becomes more efficient, ie. Mr Market correcting his/her error.

As a durian lover, do we prefer more expensive or less expensive durians? If we are eating more, we want cheaper (and tastier) durians.  But if one day we decide to go upstream (as many durian lovers have done) and start selling what we love, we surely want more expensive durians (p.s. durian retailers generally earn a fixed margin as % of MSRP, just like how TheHourGlass sells their timepieces).

We can only accept what (or what we think) is coming to us. And then adjust our style accordingly.

[Big Toe]

Research Reports

On the Quantitative side one can do no wrong if one is diligent enough.
However I do find it harder to get data that is pre internet era.
And usually I am most interested in companies with a reasonably long and rich history.

On qualitative research. This is where many analyst fail and some of us may have an edge.
Analysts do not run the business and have little knowledge of how the business works within a particular industry.
And the ones that have decades of experience are usually surprisingly enough uninterested to invest in their own industry.
(Grass is greener on the other side perhaps?)

[weijian]

The frontrunning of the 5bil EQDP have made many "value investors" feeling vindicated, especially the last 3-6 months. I tend to agree that if only the demand side (capital) improved but the supply side (companies) remains "business as usual", nothing fundamental will change. In the last 1 year, there has indeed been much value accretive/OPMI-friendly moves been made or a work in progress on the "supply side" though:

*Jardine stable refreshing their entire boards/executives and capital allocation
*Big 3 local banks and GLCs (Singtel/ST Eng) returning excess capital via SBB/special dividends
*Keppel/Capitaland Investment changing their business model and working towards been asset light.
*Towkays of various small/med caps unlocking value by listing their subsidiaries (Boustead Spore, Centurion Corp, Lum Chang, LHN etc)

Mr Market has rewarded many of them. As the saying goes, Monkey see Monkey do. So if the "supply side" continues to take more value accretive/OPMI-friendly actions as valuations are improved by "demand side", the virtuous cycle can truly have a life of its own.

It’s sink or swim time for local small and mid-cap stocks

According to SGX data, the FTSE ST Mid and Small Cap Index rose 9 per cent in the third quarter of FY2025 to Aug 12, compared with just 1.8 per cent in the first half of the fiscal year.

For investors, the challenge lies in identifying which of these names are buoyed by fundamentals that can endure over time, and which are lifted mainly by cheap valuations that may not last.

To that end, companies will need to deliver on concrete milestones such as meeting earnings forecasts, securing order books and maintaining dividends to prove recent gains are sustainable.

https://www.businesstimes.com.sg/opinion...cap-stocks

[weijian]

Founder Tan thinks that MAS's efforts to revitalize the market will not focus on education stocks and he is right. But I don't think MAS has any biases towards any particular business model as well, although that can't be said of investors.

As things have it, the Sporean education is a commodity in Spore but a premium/luxury outside of Spore. So HKEX might be the best place to allow him and his staff to monetize.

KinderWorld prepares for Hong Kong IPO, even as it plans a homecoming in Singapore

In 2018, a local bank offered to help take the business public in Singapore, said Tan. Hoping that this would provide extra funds to reward its key staff, KinderWorld began the process and received the necessary approvals to list on the SGX the following year.

But the move fell through because of what Tan called a buyer-seller mismatch; its underwriter revised its suggested valuation.

An “entrepreneur at heart”, Tan tried to list on the SGX again in 2020. But that IPO attempt was halted because of a gap in valuation expectations, caused by uncertain market conditions.

Earlier plans to list on SGX were driven by “patriotism” and observations of some successful listings. But Tan has seen that education players perform poorly on the bourse, with declining market capitalisation. He also does not believe that the efforts to revitalise SGX will focus on education stocks.

In contrast, Hong Kong has a good track record for education listings, he said.

Hong Kong has welcomed an influx of young people and families from mainland China, after protests in 2019 created an exodus of Hong Kongers, said Tan. He sees a business opportunity for KinderWorld, given that parents from China recognise the strength of Singapore’s world-class curriculum.

But asked what other places he might consider, Tan replied: “Wherever there’s a place that loves the Singapore education system.”

https://www.businesstimes.com.sg/singapo...-singapore

[weijian]

Actually, most local companies already have shining examples to learn from in terms of "better communications" - IFAST's CEO Lim and Novo Tellus Capital's Loke, 2 names that come straight off my head. I am not a fan of "revenue guidance" but I have to admit it often works, and sometimes so good that it reduces market inefficiencies on the cheap side. But at the same time, it also increases the market inefficiencies on the expensive side and is great for OPMIs ready to exit.

There are not many companies as visible/vocal as IFAST or Novo Tellus Capital's portfolio companies (eg. AEM Holdings, GVT and ISDN Holdings) but anecdotally, I am seeing a shift. For example, Sheng Siong started to publish more comparison metrics in their financial reporting in the last few years. And a local construction company revealed their Changi T5 contract size win, a first time it ever revealed quantitative numbers over the past decade I owned it. There are definitely more such examples around.

Companies which are late to the party and decide to start to "change" will be the next opportunities for OPMIs I suppose.

SGX to launch index that tracks listcos beyond STI: Chee Hong Tat

[SINGAPORE] The Singapore Exchange (SGX) will be launching an index that tracks listed companies that are not constituents of the Straits Times Index (STI), as part of efforts to showcase its broader equity market, said Monetary Authority of Singapore (MAS) deputy chairman Chee Hong Tat on Friday (Sep 12).

Over the last few months, the group has launched several initiatives, in addition to the S$5 billion equity market development programme. Others include tax incentives for companies listing in Singapore, as well as consolidating listing and prospectus disclosures under a single regulator, to speed up the process of reviewing a listing.

Chee said: “They want to understand your growth story, not just your current performance. They want visibility on capital allocation, clarity on long-term strategy, and confidence that management is committed to creating value... (Companies) must present a compelling narrative of how today’s actions will translate into tomorrow’s success...

They can also share views on their outlook and prospects – commonly done in overseas markets – as it gives investors greater visibility of their trajectory and also demonstrates managements’ confidence in delivering strategic objectives.

Tan Boon Gin, CEO of Singapore Exchange Regulation, urged companies to engage with investors better. “Companies that want to be noticed and rewarded for having quality management and business strategies must proactively communicate their outlook and strategies to provide forward-looking guidance.”

The review group is developing a set of measures to support companies in unlocking shareholder value. More details will be announced later this year. 

https://www.businesstimes.com.sg/compani...e-hong-tat

Chee Hong Tat's full speech found here: https://www.mas.gov.sg/news/speeches/202...-companies