Dear readers, you may have come across recent news that the Monetary Authority of Singapore (MAS) has appointed three fund managers to manage a $1.1 billion equity injection into the Singapore stock market. This bold move is part of the Singapore government’s broader Equity Market Development (EMD) initiative—a multi-year effort aimed at strengthening the vibrancy and resilience of our local bourse.
This initiative comes at a time when the Straits Times Index (STI) has soared above 4,000 points, primarily driven by blue-chip and large-cap stocks. But there is now a growing hope that the attention—and the capital—will soon trickle down to revitalise the long-overlooked small and mid-cap segment of the Singapore Exchange (SGX).
Let’s dive into what this equity injection means, who the key players are, and why one of the appointed fund managers—Avanda Investment Management—is taking a refreshingly bold approach by focusing on small to mid-cap stocks.
MAS Appoints Three Fund Managers to Deploy Equity Capital
The three fund managers appointed under the EMD programme are:
- Avanda Investment Management
- Fullerton Fund Management
- JP Morgan Asset Management
While all three are reputable and experienced institutional investors, the spotlight has recently been shining on Avanda Investment Management. The firm is led by Mr. Ng Kok Song, former Chief Investment Officer of GIC and also a candidate in the 2023 Singapore Presidential Election.
Avanda’s involvement was highlighted in a recent cover story by The Edge Singapore, where its unique strategy was unveiled: instead of focusing on the traditional large-cap STI constituent stocks, the firm aims to uncover long-term value in Singapore’s under-the-radar small and mid-cap segment.
A Government-Led Push to Deepen Singapore’s Equity Market
The MAS initiative is part of a long-term vision to develop Singapore into a more dynamic equity capital market. Singapore already excels in many financial areas, such as REITs and bonds, but the equity market—especially for local companies—has struggled with low liquidity and limited retail participation.
This programme hopes to change that.
By appointing fund managers to actively invest in Singapore-listed equities using public funds, MAS is trying to:
- Attract more institutional and retail interest.
- Increase trading volumes.
- Improve valuations, especially for smaller companies.
- Encourage listings and retain quality companies in Singapore.
This is not merely about market optics. It’s about injecting long-term confidence, liquidity, and research coverage into our stock market—elements that are desperately needed in our small and mid-cap segment.
Why Avanda Investment Management’s Strategy Stands Out
What makes Avanda’s role especially exciting is its focus on uncovering hidden gems in the Singapore equity space.
While Fullerton and JP Morgan are likely to adopt a more balanced or large-cap tilt—given their global mandates and fiduciary responsibilities—Avanda’s stated strategy is more focused and differentiated. According to The Edge Singapore, Avanda is looking beyond the obvious choices and into lesser-known companies that are fundamentally sound but undervalued.
This is an applaudable move.
Historically, the STI component stocks—such as DBS, OCBC, UOB, Singtel, and Keppel Corp—have received the lion’s share of analyst coverage, institutional flows, and media attention. In contrast, dozens of well-run small and mid-cap companies have languished in obscurity, with thin trading volumes and suppressed valuations.
Examples of such laggards abound: companies trading below book value, those with consistently high dividends, or firms sitting on valuable assets not reflected in their market prices. Avanda’s approach could finally unlock this untapped value.
Small and Mid-Cap Stocks: Undervalued, Underloved, and Underwatched
It’s no secret that Singapore’s small and mid-cap stocks suffer from several structural issues:
- Lack of Liquidity
Many investors shy away due to low daily trading volumes. - Limited Analyst Coverage
Few brokerage houses allocate research resources to cover these stocks, creating an information vacuum. - Valuation Disconnect
Several small-cap companies trade at large discounts to book value or even net cash. - Corporate Governance Perceptions
Retail investors remain cautious, citing historical concerns over transparency and shareholder treatment in certain firms.
However, these challenges also present opportunities. With institutional fund managers like Avanda entering the space, we could finally see:
- Enhanced scrutiny and corporate accountability.
- Better investor education.
- A virtuous cycle of rising volumes, valuations, and coverage.
The STI Rally Has Peaked—Now It’s Time for the Rest to Catch Up
The STI recently broke the 4,000 mark—an impressive milestone and a signal of investor confidence. However, this rally has been narrowly driven by large-cap financials and select industrials. The breadth of the rally has been limited.
There’s a strong argument to be made that the small to mid-cap segment is now due for a catch-up rally.
With catalysts like:
- Government-backed institutional investment
- Rising retail investor interest
- Corporate restructuring and privatisation themes
- Rebounds in dividend payouts post-COVID
… the stage is set for a potential broad-based move that goes beyond the STI.
What Kind of Stocks Might Avanda Invest In?
While Avanda has yet to publicly announce specific stock picks, we can speculate on the type of criteria they might use based on their value-oriented philosophy:
- Low Price-to-Book or Price-to-Earnings Ratios
- High Return on Equity or Consistent Earnings
- Strong Net Cash Balance Sheets
- Hidden Real Estate or Asset Value
- Dividend Yield of 4% or More
- Proven Management and Track Record
Some possible candidates—based on historical valuation screens and investor speculation—include:
- Micro-Mechanics (Holdings)
- Food Empire Holdings
- UMS Holdings
- Silverlake Axis
- ComfortDelGro
- Lian Beng Group
- The Hour Glass
- Boustead Singapore
These are purely examples for illustration and not investment advice. Still, companies with strong fundamentals but limited coverage may find themselves in the spotlight.
Could This Lead to a Golden Age for Singapore Retail Investors?
If MAS’s equity injection programme succeeds, it could usher in a more inclusive and vibrant capital market:
- Retail investors will benefit from more research and broader investment opportunities.
- Companies will enjoy higher valuations and may consider listing or dual-listing in Singapore.
- The SGX may finally become a go-to market for ASEAN-focused equity investments.
This initiative also supports Singapore’s broader economic ambitions: to remain a global financial hub, a magnet for talent and capital, and a leader in innovation and governance.
A Final Word: The Real Measure of Success
While this government-led injection is undoubtedly a bold and welcomed move, the true measure of success lies in sustained interest, genuine value creation, and improved participation in the Singapore stock market—especially from the younger generation of investors.
To achieve that, it’s not just about fund flows. It’s about:
- Transparency from companies.
- Accessibility of investing tools.
- Education to empower everyday investors.
- Inclusion of diverse and underrepresented sectors of the economy.
Avanda Investment Management’s focus on small to mid-cap stocks could be a catalyst. But ultimately, the ecosystem needs to rise together—fund managers, regulators, listed companies, analysts, and investors all have a role to play.
Conclusion: Watch This Space—Small Caps Might Be the Big Story of 2025
Singapore’s stock market may finally be undergoing a long-overdue rejuvenation. With the MAS injecting $1.1 billion into the market and Avanda looking beyond the usual suspects, there is real hope that small and mid-cap stocks—so often ignored—may finally get their day in the sun.
For investors, this could be an opportune moment to look beyond the STI and explore value in the deeper waters of the Singapore Exchange. As always, due diligence and diversification remain key.
The big may already be beautiful—but in 2025, it might be the small and nimble that deliver the biggest surprises.