Prime Highlights:
- Singapore expanded its Equity Market Development Programme to $6.5 billionto improve trading liquidity, deepen market participation and strengthen its capital markets.
- Singapore Exchange is expected to benefit from higher trading volumes, though RHB Investment Bank maintained a neutral rating due to valuation concerns.
Key Facts:
- SGX projects average daily securities turnover to rise from $1.3 billion in FY2025 to $1.84 billion by FY2028, while derivatives volumes are forecast to grow about 10.4% annually.
- RHB estimates SGX’s recurring net profit could increase from $611 million in FY2025 to $853 million by FY2028, with dividends per share potentially rising from $0.38 to $0.60.
Background:
Singapore has expanded its Equity Market Development Programme to $6.5 billion in a step aimed at improving trading and market depth. The scheme directs institutional funds into local stocks to increase liquidity and encourage more participation.
The programme channels institutional funds into domestic equities to increase trading depth and attract more investor participation. According to a report by RHB Investment Bank, the larger allocation could help raise securities turnover, support corporate fundraising and enhance overall market efficiency.
The Singapore Exchange expects its average daily securities turnover to rise from $1.3 billion in FY2025 to $1.84 billion by FY2028. Derivatives trading is expected to grow steadily, with volumes rising about 10.4% each year, as institutions trade more and use them for hedging.
Stronger trading activity will probably increase SGX’s profits. RHB expects SGX’s recurring net profit to grow from $611 million in FY2025 to $853 million by FY2028. The dividend per share could increase from $0.38 to $0.60, reflecting higher earnings and ongoing payments to shareholders.
Despite the positive earnings outlook, the brokerage maintained a “neutral” rating on SGX with a target price of $19. The exchange is currently trading at about 26 times forward earnings, above its historical average, which limits near-term upside, the report said.
RHB added that further share price gains would depend on sustained growth in trading volumes or new catalysts that could drive market participation.
The expansion of the equity programme forms part of Singapore’s broader strategy to strengthen its capital markets, improve liquidity and attract more listings and investment flows to the domestic exchange.
