Singapore Stocks: 80% Investor Confidence Amid Challenges

Singapore's stock market has long been a pillar of stability in Asia's financial landscape, yet it faces persistent challenges that threaten its appeal to both retail and institutional investors. A recent survey conducted between November 2024 and January 2025 by the Securities Investors Association (Singapore) (SIAS) and financial insights platform Beansprout reveals that 80% of retail investors remain confident in Singapore stocks, despite concerns over low returns, weak market liquidity, and limited access to reliable research. This article provides a comprehensive analysis of the survey findings, contextualizes them within the broader market environment, and offers a critical perspective on the future of Singapore's equities market. While investor confidence is a positive sign, I argue that deeper structural reforms are essential to address underlying issues and ensure long-term growth, particularly in engaging younger investors and attracting innovative listings.

The survey's headline result is striking: 80% of approximately 1,000 retail investors polled expressed interest in investing in Singapore's equities market. This confidence is particularly pronounced among older investors, who value the familiarity and perceived stability of local stocks. Investors aged 55 to 64 allocate more than 50% of their portfolios to Singapore stocks, while those above 64 dedicate 70% or more. This preference reflects Singapore's reputation as a stable financial hub, underpinned by strong economic fundamentals, transparent regulations, and a history of reliable dividend-paying companies. The Straits Times Index (STI), for instance, includes blue-chip firms like DBS Group, UOB, and OCBC, which have delivered consistent returns and dividends, making them attractive to risk-averse investors.

The generational divide in investment preferences is a defining feature of Singapore's equities market and reflects broader global trends. Older investors, with their substantial allocations to local stocks, are motivated by trust in Singapore's economic stability and a preference for low-risk, dividend-focused investments. Singapore's banking sector, which dominates the STI, has delivered average dividend yields of 5.2% in 2024, compared to 1.8% for the S&P 500. This focus on dividends aligns with the financial goals of older investors, many of whom are nearing or in retirement and prioritize steady income over capital gains. Additionally, Singapore's strong corporate governance and regulatory oversight further enhance its appeal to conservative investors.

Despite the high confidence levels, the survey highlights significant concerns among investors, including perceived low returns, weak market liquidity, and the need for reliable, easy-to-read analyst reports. Over half of the respondents emphasized the importance of "better investment options" over simply expanding the selection of available stocks, signaling dissatisfaction with the market's performance. The STI's 16.9% return in 2024, while its best since 2017, lags behind global peers like the S&P 500 (24.6%) and Japan's Nikkei 225 (28.7%), highlighting the competitive disadvantage faced by Singapore stocks. This gap in returns is particularly concerning for younger investors, who are more likely to benchmark local performance against global indices.

Recognizing the need to revitalize the local stock market, the Monetary Authority of Singapore (MAS) has introduced several measures to address investor concerns. In February 2025, MAS announced a $5 billion Equity Market Development Programme, partnering with selected fund managers to invest in Singapore-listed stocks. This initiative aims to boost retail and institutional investor interest, improve trading liquidity, and enhance valuations. Additionally, Budget 2025 introduced tax incentives to encourage companies and fund managers to list on the SGX, streamlining regulations to make the listing process more efficient. These measures are designed to cultivate quality initial public offerings (IPOs) and increase institutional activity, addressing some of the key barriers to market growth.

In my view, while investor confidence in Singapore stocks remains strong, the underlying concerns—low returns, weak liquidity, and limited research access—pose significant risks to the market's long-term relevance. The generational divide in investment preferences further complicates the challenge, as younger investors' preference for U.S. markets and cryptocurrencies threatens to erode Singapore's retail investor base. The MAS's recent measures are a step in the right direction, but they are insufficient on their own to address the structural issues plaguing the market. Singapore must adopt bolder strategies, including reducing trading fees, lowering minimum board lot sizes, and leveraging digital platforms to engage younger investors. These reforms are essential to make local stocks more accessible and appealing to a broader audience.

The survey's findings highlight both the resilience and the challenges of Singapore's stock market. While investor confidence is a positive signal, the generational divide and persistent concerns over returns, liquidity, and research access underscore the need for sustained efforts to revitalize the market. The MAS's recent measures are a promising start, but they must be complemented by broader structural reforms to address the root causes of investor dissatisfaction. For Singapore to remain competitive, it must adapt to changing investor preferences, particularly among younger generations, and position itself as a hub for innovative listings. The stakes are high, and failure to act decisively could result in a loss of relevance in an increasingly competitive global market.