.IN FOCUS: IPO Drought, Poor Valuations: Strategies to Revive Singapore’s Ailing Stock Market Singapore’s stock market has been facing a double whammy of challenges: an IPO drought and depressed valuations. To address these issues and revive the market, experts propose several measures: Encourage High-Growth Startups: * Implement tax incentives and regulatory support to attract promising startups. * Establish specialized exchanges tailored to growth-oriented companies, providing liquidity and visibility. Enhance Market Infrastructure: * Introduce short selling and alternative trading platforms to increase market depth and liquidity. * Streamline listing requirements to reduce barriers for smaller companies. Foster Investor Confidence: * Strengthen corporate governance and accounting standards to protect investors. * Provide investor education programs to enhance market understanding and encourage participation. Improve Valuation Metrics: * Encourage the use of forward-looking metrics, such as price-to-sales and price-to-earnings ratios, to reflect future growth potential. * Emphasize long-term performance over short-term gains to discourage speculative behavior. Promote Regional Collaboration: * Collaborate with neighboring markets, such as Indonesia and Malaysia, to create a larger pool of potential issuers and investors. * Participate in cross-border listing initiatives to attract international capital. Government Support: * Provide targeted financial assistance and funding programs for promising startups. * Collaborate with industry associations and research institutions to foster innovation and market growth. Digitalization and Innovation: * Leverage technology to improve trading efficiency and reduce transaction costs. * Explore new financial instruments, such as special purpose acquisition companies (SPACs), to provide alternative funding options. Long-Term Vision: * Recognize that market recovery takes time and requires a sustained effort. * Focus on building a robust and resilient ecosystem that supports continuous growth and attracts global investors. By implementing these measures, Singapore can address the challenges facing its stock market and pave the way for a vibrant and attractive investment destination. This will not only benefit issuers and investors but also contribute to the overall economic growth of the country.## GOVERNMENTAL MEASURES## GOVERNMENTAL MEASURES The Singapore government has implemented several initiatives to enhance the appeal of the local stock market: * Anchor Fund @ 65 and EDBI Growth IPO Fund: Established in 2022, these funds provide support to high-growth companies seeking to raise capital through public listings on the Singapore Exchange (SGX). They advise companies on listing requirements and facilitate interactions with investment banks and market makers. To date, these funds have invested in nine companies. * Singapore Equity Market Subsidy (GEMS) Programme: Launched in 2019 by the Monetary Authority of Singapore (MAS), GEMS offers grants of up to S$2 million to defray listing-related expenses for eligible companies. As of May, the grant has supported 46 projects across various industries. * Research Development Grant: As part of GEMS, a grant has been provided to support research houses that hire research analysts. These analysts have produced over 900 research reports covering 130+ SGX-listed companies, providing valuable insights to retail investors. * New Listing Rules: SGX introduced new rules in 2021 to allow the listing of special purpose acquisition companies (SPACs) on the main board. Additionally, a Thailand-Singapore Depositary Receipt was launched to expand access to capital and markets. * Market-Making and Liquidity Provision Programme: SGX initiated a programme in 2014 to increase trading volumes. Details of this programme are not disclosed due to confidentiality.IPO Drought and Poor Valuations Hamper Singapore’s Stock Market Singapore’s stock market has faced significant challenges in recent times, including a drought of initial public offerings (IPOs) and lackluster valuations. These factors have contributed to a decline in market activity and investor interest. The IPO drought has been particularly pronounced, with a sharp drop in the number of new listings in Singapore over the past year. This has been attributed to factors such as global economic uncertainty, rising interest rates, and geopolitical tensions. At the same time, valuations for listed companies in Singapore have remained depressed, making it less attractive for new companies to go public. The price-to-earnings (P/E) ratios of many Singaporean stocks are below their regional peers, suggesting undervaluation. Analysts have identified several factors that could contribute to a revival of Singapore’s stock market. These include: * Strengthening economic fundamentals: Singapore’s economy is expected to continue growing, albeit at a slower pace. This should provide a positive backdrop for corporate earnings and investor sentiment. * Lowering interest rates: The Monetary Authority of Singapore (MAS) has indicated its willingness to ease monetary policy if necessary. This could make it more attractive for investors to allocate funds to equities. * Improving IPO regulations: The Singapore Exchange (SGX) is considering changes to its listing rules to make it more appealing for new companies to go public. This could include measures to reduce the cost and complexity of the listing process. * Encouraging mergers and acquisitions: The SGX is also looking to facilitate more mergers and acquisitions (M&A) activity. This could create larger, more stable companies that are more attractive to investors. The Singapore government has recognized the challenges faced by the stock market and is taking steps to address them. Finance Minister Lawrence Wong has stated that the government is committed to supporting capital markets and promoting a vibrant economy. Analysts remain cautious about the outlook for Singapore’s stock market in the short term, but believe that the long-term prospects are positive. By implementing the right measures, Singapore can revive its stock market and regain its position as a leading regional financial hub.