EQDP: The spark that Singapore's equity market needed — and why the momentum is here to stay

• EQDP addresses a structural demand gap, catalysing a shift from persistently low liquidity and weak listings toward a more functional equity market.

• Market activity has rebounded, with Securities Daily Average Value (SDAV) rising 21% in 2025 and IPO proceeds exceeding SGD 2.1 billion, reversing 2024’s trough.

• Foreign inflows reached USD 2.3 billion in 2025, confirming renewed global investor participation alongside accelerating ETF flows.

• SMIDs are leading the recovery, with sustained inflows, 135% turnover growth, and direct exposure to Singapore’s structural growth sectors.

• STI still trades at a reasonable valuation compared to regional peers, while earnings growth above 10% in 2026 supports further upside.

EQDP targets a structural demand gap

Between 2020 and 2024, Singapore’s equity market reflected a persistent disconnect between fundamentals and investor participation. Governance standards remained strong, dividend yields were competitive, and the macro backdrop was stable, yet capital allocation continued to shift away from the market. Liquidity remained subdued, retail participation rotated toward property and offshore equities, and the IPO pipeline weakened steadily.

This divergence became most visible in primary market activity. In 2024, the Catalist Board recorded just four listings while the Mainboard saw none, leaving the Singapore Exchange (SGX) ranked last among Southeast Asian exchanges by funds raised. At the same time, the Straits Times Index (STI) traded at a persistent discount to regional peers, reflecting structural limitations in liquidity, market depth, and the ability to sustain a consistent listing cycle.

Policy response followed a clear diagnosis. The Monetary Authority of Singapore (MAS), through the Equities Market Review Group established in August 2024, identified three interlocking constraints: an insufficient pipeline of quality listings, weak participation beyond large caps, and inefficient trading conditions in the small- and mid-cap segment.

Launched in February 2025 with an initial SGD 5 billion allocation, EQDP targets the demand side by channelling institutional capital into Singapore-focused equity strategies while attracting third-party investment alongside it. As liquidity improves and participation broadens, the programme is designed to restore price discovery and rebuild the conditions for a sustainable listing environment.

Liquidity recovery is translating into market function

Market activity has strengthened meaningfully since implementation, with improvements in both trading intensity and participation. Securities daily average value (SDAV) rose 21% year-on-year in 2025 to nearly SGD 1.5 billion, the highest level since 2010, and maintained a steady uptrend following the programme’s launch. This momentum extended into 2026, with SDAV expanding 62% year-on-year in March alongside a corresponding increase in overall turnover.

Figure 1: Singapore Exchange SDAV accelerates following EQDP implementation

Improving liquidity has begun to translate into issuer confidence. Singapore’s IPO market raised more than SGD 2.1 billion in 2025, placing the SGX at the top of Southeast Asia by proceeds, a reversal from its last-place position in 2024. Stronger secondary market conditions reduced execution risk and improved pricing visibility, allowing issuers to return to the market with greater confidence.

Figure 2: Singapore leads Southeast Asia in total IPO funds raised in 2025

Capital flows reinforce this shift. Net foreign inflows reached approximately USD 2.3 billion in 2025, ranking among the strongest years of net buying since 2010, while ETF inflows accelerated and continued into 2026. Initial allocations seeded by EQDP have drawn incremental capital as global investors respond to improving liquidity and execution conditions.

Figure 3: ETF fund flows strengthen in 2025 and extend into 2026

SMID recovery is driving broader market depth and participation

The most pronounced change is occurring in the small and mid-cap segment, where structural frictions had been most evident. Following the first set of measures in February 2025, net institutional inflows into SMIDs remained positive for nine consecutive months, indicating sustained rather than tactical positioning. This trend extended into 2026, with the segment excluding REITs attracting close to SGD 470 million of net inflows in the first quarter, while average daily turnover in January rose 135% year-on-year.

As liquidity improves, the participation gap between large caps and the broader market is narrowing. This shift expands the investable universe, supports more efficient price discovery, and restores the depth required for a functioning equity market.

Figure 4: Small and mid-cap stocks outperform the STI since 2025

Although EQDP is directed at SMIDs, its effects are transmitting to the broader market, including the STI. Portfolio construction by EQDP-backed managers typically incorporates large-cap names to maintain liquidity and provide an accessible entry point for foreign investors establishing Singapore exposure. At the same time, stronger SMID valuations improve the listing proposition for growth companies, which expands the opportunity set and feeds into a broader earnings base over time.

As liquidity deepens across segments, the structural discount that has historically weighed on Singapore equities is beginning to narrow. The market is no longer segmented between liquid large caps and illiquid SMIDs but is evolving toward a more integrated and investable structure.

A mid-cycle re-rating supported by earnings and self-reinforcing policy design

The durability of the recovery rests on valuation and earnings rather than policy alone. Despite the gains in 2025, the STI continues to trade at a reasonable valuation relative to some regional peers on a price-to-earnings basis, while offering a comparable earnings growth profile alongside a more attractive dividend yield.

Figure 5: STI trades at a valuation discount to many of the Asian markets

Earnings growth provides the foundation for further upside. STI’s earnings per share is expected to grow more than 10% in 2026, led by industrials. Meanwhile the banking sector, which accounts for roughly half the index, is positioned for recovery as net interest margin pressures stabilise and wealth management income strengthens.

Related article: Singapore: STI to hit near 6,000 by the end of 2028, alongside an annual dividend yield of 5%

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This earnings support is also pronounced in the small and mid-cap segment, where listed companies provide direct exposure to Singapore’s structural growth drivers. While STI is concentrated in banks, REITs, and telcos, much of the economy’s higher-growth segments, including semiconductor supply chains, defence technology, AI infrastructure, precision engineering, and cybersecurity, are predominantly represented within SMIDs.

Companies such as UMS Integration is positioned within the semiconductor equipment value chain, benefiting from the ongoing AI-driven capex cycle, while CSE Global’s long-term partnership with Amazon, extending through 2030, anchors its exposure to data centre electrification demand. In parallel, Singapore’s defence budget for 2026 sees a 6.4% year-on-year increase, with development expenditure rising 19%, which supports multi-year revenue visibility for engineering and maintenance players tied to government contracts.

Taken together, the SMID segment represents the listed expression of Singapore’s structural growth economy rather than a cyclical extension of domestic demand. Historically, this segment has traded at a discount due to liquidity constraints and limited institutional coverage. As EQDP channels capital and research attention into the space, improving liquidity and stronger earnings visibility begin to reinforce each other, supporting both earnings upgrades and valuation expansion within the same cycle.

The programme’s design further strengthens the durability of this dynamic. EQDP is structured to attract third-party capital alongside its initial SGD 6.5 billion allocation, with appointed managers required to scale external participation. As inflows broaden, liquidity improves, which in turn enhances market accessibility and draws additional capital, creating a compounding effect over time.

Complementary initiatives led by the SGX and the MAS, including the SGX–Nasdaq dual listing framework, the SGD 30 million Value Unlock Package, expanded Grant for Equity Market Singapore (GEMS) research coverage, and board lot size reductions, further extend the programme’s reach across market structure, access, and visibility.

Positioning for further upside in an ongoing re-rating cycle

In 2026, Singapore equities offer a combination of value, income, and credible structural reform that remains differentiated within the region. The re-rating case is anchored in three reinforcing drivers: an earnings recovery that is gaining traction, sustained capital inflows supported by Singapore’s safe-haven positioning, and a valuation gap that has narrowed but not closed.

As liquidity improves and earnings visibility strengthens, Singapore’s equity market is transitioning from being structurally overlooked to structurally investable.

For investors seeking exposure to this market revitalisation, we continue to recommend positioning through the Amova Singapore Dividend Equity SGD Fund, the Amova Singapore STI ETF (SGX: G3B), and the LionGlobal Singapore Trust Fund for broader exposure including the small and mid-caps.

Exposure	Recommended Product
Singapore	Amova Singapore Dividend Equity SGD Fund Amova Singapore STI ETF (SGX: G3B)
EQDP (higher SMID exposure)	LionGlobal Singapore Trust Fund

Declaration:

For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.

This research report was prepared with the assistance of artificial intelligence (AI) tools. iFAST Financial Pte Ltd does not rely exclusively on AI for content generation; the content of this report – including all investment theses, ratings, price targets and conclusions – has been independently reviewed and verified by the research analyst(s) to ensure accuracy and professional integrity.