Singapore’s Market Awakening: Revival or True Reinvention?

For years, the Singapore stock market has battled criticism regarding its lack of dynamism, often overshadowed by its high-growth neighbours in Southeast Asia. However, 2025 has marked a significant turning point. The benchmark Straits Times Index (STI) has shattered multiple record highs, driven primarily by the robust performance of local banking giants and blue-chip stalwarts. Yet, as global capital shifts towards stable jurisdictions, the pressing question for institutional investors is whether this rally represents a fleeting resurgence or the beginning of a structural reinvention.

The current optimism is largely fuelled by the Monetary Authority of Singapore’s decisive intervention. The introduction of the Equity Market Development Programme (EQDP), valued at approximately US$3.88 billion (S$5 billion), has been a critical catalyst for sentiment. With nearly US$3 billion already allocated to fund managers mandated to target the small and mid-cap space, the market is witnessing an artificial but necessary liquidity boost. This capital injection is expected to have a pronounced impact on the newly launched iEdge Singapore Next 50 Index, which tracks the 50 largest companies outside the STI, representing a combined market capitalisation of roughly US$70 billion.

While the policy response has been robust, liquidity remains the "secret sauce" for any capital market aspiring to global relevance. Volume attracts Initial Public Offerings (IPOs) and supports higher valuation multiples. In this regard, Singapore has seen a marked improvement, leading Southeast Asia in IPO proceeds this year. Nine deals raised approximately US$1.6 billion, a stark contrast to the meagre US$34 million raised in 2024. However, the bulk of this capital came from two major Real Estate Investment Trust (REIT) listings—NTT DC REIT and Centurion Accommodation REIT—suggesting that the market’s reliance on yield-focused assets remains entrenched.

Despite these successes, trading volumes have shown signs of fatigue. Monthly volume dropped from 38.6 billion shares in September to 29.3 billion in November. Current daily liquidity hovers around US$1.1 billion, which still trails behind regional peers like Australia and Thailand, where domestic pension funds provide a consistent floor of buying pressure. For the rally to persist into 2026, the deployment of EQDP funds in the first quarter must be met with organic market participation.

To sustain this momentum, market mechanics require modernisation. Currently, the Central Depository Board acts as the primary safekeeper for securities. A shift towards enhancing the custodial role of brokerages could unlock significant liquidity. By facilitating broker custody accounts, the market could enable more sophisticated services such as portfolio management, fractional trading, and margin financing, aligning Singapore with global standards and attracting internationally active asset managers.

Furthermore, there is a growing consensus that the exchange must aggressively court "homecoming" listings. High-profile Singaporean tech entities like Sea and Grab, currently listed abroad, represent the new economy sectors that the local bourse desperately needs. Creating mid-cap Exchange Traded Funds (ETFs) based on the iEdge Singapore Next 50 Index could also provide a stable investment vehicle for passive flows, provided the underlying shares possess sufficient liquidity.

As we look toward 2026, geopolitical friction elsewhere may serve as a tailwind for Singapore. Global uncertainty often drives capital towards safe-haven markets with strong rule of law and currency stability. However, a revival in share prices is not synonymous with a reinvention of the market’s utility.

The Singapore market is finally awake, but the hard work begins now. The focus must shift from state-led liquidity injections to creating a self-sustaining ecosystem that attracts new sectors beyond REITs. As observed by market commentators, "A revival is not the same as reinvention." The coming year will determine if Singapore can transition from a yield-safe harbour to a dynamic growth engine.