Singapore’s Stock Market Rebounds, But Underlying Challenges Persist
After a sluggish start to 2025, signs of a rebound are emerging on the Singapore Exchange (SGX).
July saw several noteworthy listings: Info-Tech Systems debuted on the mainboard on July 4, followed by NTT DC Reit—the largest REIT IPO in a decade—just ten days later. China Medical System arrived as a secondary listing on July 15, and Lum Chang Creations joined the Catalist board on July 21. Several others, including Centurion Accommodation Reit, Dezign Format, and Coliwoo Group, have announced plans to list by year-end.
The pipeline looks promising, especially compared to the dismal first half of the year when only one IPO (Vin’s Holdings) came to market, bringing in just US$30 million in IPO market cap—far below Malaysia’s US$4 billion from 32 listings, according to Deloitte.
To boost market depth, SGX’s equities market review group also unveiled three initial fund managers who will tap into a S$5 billion fund aimed at enhancing liquidity.
Meanwhile, the Straits Times Index continues its upward trajectory, recently surpassing the 4,000-point milestone.
📉 Beneath the Optimism: Structural Concerns
Despite the renewed momentum, not all is as rosy as it seems.
A closer inspection of the upcoming listings reveals a heavy reliance on spin-offs—subsidiaries of already-listed companies. For instance:
- Coliwoo is part of LHN Group
- Lum Chang Creations stems from Lum Chang Holdings
- Centurion Accommodation Reit is spun off from Centurion Corporation
While spin-offs can signal confidence in a business segment, they come with complications—especially if board members from the parent company remain involved. This raises questions about independence, governance, and long-term shareholder value.
SGX rules mandate that spin-offs must be independently managed, profitable, and have distinct operations and assets. They must also deliver more tangible benefits than the current corporate structure. However, regulatory safeguards can’t always protect investors from dilution, conflict of interest, or post-listing performance drops.
Worse, spin-offs rarely add new depth to the market. Instead, they often reshuffle existing value without significantly expanding investor reach or capital formation.
🧾 SDRs: Progress, But Limited Impact
Singapore Depository Receipts (SDRs) are another area SGX is actively promoting. These instruments allow local investors to access foreign stocks without cross-border complexities.
The SDR platform now hosts 21 securities, with a record S$5.4 million in turnover logged in May. The review group recently announced subsidies to support further SDR listings.
But SDRs are inherently limited. They do not raise capital, and liquidity tends to be fragmented across the primary and secondary markets. For example, BYD, the most traded SDR on SGX, averages S$1.1 million in daily turnover—half of what mid-cap names like SIA Engineering see.
🧭 The Road Ahead: Beyond the Numbers
The buzz surrounding new listings and SDRs shouldn’t distract from the larger question: Are these developments truly strengthening Singapore’s capital markets?
While spin-offs and SDRs serve niche investor needs, they do little to address deeper concerns around long-term liquidity, institutional confidence, and capital formation.
As the market review committee prepares its next set of recommendations, the key lies in quality over quantity. Only listings with robust governance, independent operations, and long-term growth potential will build lasting investor trust.
A surge in IPOs may look good on paper—but the SGX’s future will hinge on sustainable, high-caliber listings that stand the test of time.
