(MENAFN- The Arabian Post)

Singapore's Monetary Authority has designated S$1.1 billion to three fund managers as the inaugural allocation of its S$5 billion Equity Market Development Programme. The scheme aims to invigorate the bourse and broaden market participation, focusing on smaller- and mid-cap equities.

MAS selected Avanda Investment Management, JP Morgan Asset Management and Fullerton Fund Management for the initial round. Fullerton is part of state-owned Temasek. MAS indicated that the providers were chosen based on alignment with EQDP's goals and their capacity to enhance local asset‐management expertise. Over 100 applications were received, with MAS rolling out five‐year funding commitments in phases.

The EQDP was unveiled in February in coordination with the Financial Sector Development Fund. Its mandate is to deploy capital through Singapore‐based managers investing primarily in domestic listed equities, with an emphasis on diversifying participation outside large‐cap stocks.

Following the EQDP announcement in August last year, the Straits Times Index has surged 23.9% to July 18, 2025, according to MAS. Authorities believe that targeted investment injection could foster deeper liquidity, narrower bid‐ask spreads and more vigorous price discovery across the exchange.

Analysts welcomed the move. One equity strategist said the programme signals a critical shift:“MAS is using its balance sheet to catalyse private capital into under‐represented segments.” Market observers noted that while headline liquidity in the FTSE Straits Times Index is healthy, mid‐ and small‐cap names typically suffer from thin volume and wide spreads, deterring institutional and retail interest.

JP Morgan's involvement is expected to bring global asset‐management experience to bear on local strategies. Avanda, a Singapore‐grown emerging‐markets specialist, and Fullerton, with sovereign backing, strengthen confidence that domestic competence will benefit from the infusion of global best practice.

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Details of each manager's mandate have not been disclosed, but MAS emphasised that performance will be measured not only by capital deployment but also progress in building domestic expertise in portfolio construction, trading infrastructure and market‐making behaviours. These elements are crucial to achieving sustainable liquidity gains.

Experts point out that Singapore's programme mirrors efforts overseas, such as Japan's ETF purchases by its pension fund, but with a distinctive twist: the EQDP partners with private asset managers rather than buying equities directly. That design aims to stimulate skill transfer and innovation in execution capabilities.

Further co‐investment rounds are expected later this year, with MAS reviewing submissions in stages to expedite capital deployment. The S$5 billion envelope is expected to span several tranches, signalling long‐term commitment to market enhancement.

Since introducing a broad stock‐market review in August last year, MAS and its review group have identified several friction points, including limited participation by retail investors, dominance by large‐cap counters and constrained institutional activity in smaller names. EQDP is one among several initiatives aimed at remedying structural imbalances.

Regulatory adjustments are also on the cards, with potential reforms covering short‐selling rules, stock‐lending frameworks and promoting algorithmic market‐making. MAS has indicated a willingness to consult key stakeholders, including retail brokerages and the Singapore Exchange, to create complementary regulatory enablers.

Market participants have pointed out that EQDP funding alone may not be sufficient. A private fund‐operations specialist commented:“Capital without market infrastructure enhancements risks being parked rather than deployed actively.” MAS' selection criteria emphasise capacity building-suggesting this concern has been taken into account.

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Beyond boosting trading volumes, the manoeuvre may help Singapore position itself as a regional equity hub. By fostering advanced trading strategies, tighter spreads and higher turnover, the city‐state stands to attract more international fund flows. Simultaneously, support for domestic managers reinforces Singapore's ambition to strengthen its plug‐and‐play asset‐management ecosystem.

MAS confirmed that progress and outcomes will be tracked and disclosed periodically. Selected managers will have to report on liquidity metrics, investment activity and capability transfer milestones. This level of oversight reflects a strategic approach to ensure that public‐private collaboration delivers measurable structural improvements.

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