Singapore needs more diverse, high-growth listings given large-cap dominance: panellist

[SINGAPORE] Singapore needs to attract more diverse and high-growth companies to list in the country, to lower the dominance of large-cap companies on the bourse.

Dr Li Xiaowei, deputy general manager and chief investment officer at Fullgoal Fund Management, said the Republic has to provide more unique investment opportunities that are different from what is available elsewhere in Asean and in China in order to attract more Chinese investors.

“The key to the ecosystem is more listcos,” noted Dr Li, who was speaking during a panel on activating Singapore’s next growth layer at CGS’ China-Asean Business Leaders Summit on Monday (Sep 21).

Singapore has pushed to revive the local bourse in recent years, partly by supporting small and mid-cap plays. The move resulted in the Singapore Exchange’s (SGX) overall securities market turnover rising 72 per cent year on year to S$44.6 billion in FY2026.

Also speaking on the panel was Serene Cai, head of securities market and depository at SGX; Kevin Neo, CEO of Keppel Infrastructure Trust’s trustee-manager; and Patrick Yau, head of investor relations and transformation office for building materials group at Hong Leong Asia.

The panel was moderated by James Ong, group head of asset management at CGS International.

Dr Li added that Singapore’s investability is affected by its “very strong, very prominent” large-cap dominance, which is different from the situation in mainland China and Hong Kong.

The blue-chip Straits Times Index (STI) represents 80 per cent of the total market capitalisation of the SGX, whereas China’s CSI 300 represents 50 per cent of the market cap.

STI’s market capitalisation is also around 10 times that of companies in the mid-cap iEdge Singapore Next 50 Index, whereas in China, the market cap of the large-cap CSI 300 is about three times that of the mid-cap CSI 500.

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As for liquidity, a typical STI constituent trades at 10 times that of a typical stock in the Next 50. But in China, a typical stock in the CSI 300 has about two times the trading liquidity of a typical stock in the mid-cap index.

The difference between the two markets is partly due to the lack of industry diversity in Singapore. Almost 60 per cent of the STI is in the financial sector, but large-cap financials account for only 20 per cent of Chinese markets.

Meanwhile, Singapore has almost no healthcare and IT representation in the STI. These sectors account for some 35 per cent of Chinese large-caps.

Dr Li noted that the Republic’s stock exchange has been working on boosting the market, with other panellists adding that the Equity Market Development Programme (EQDP) was a right step in the right direction, although it is not a silver bullet.

“It’s meant to catalyse, transform and change,” said SGX’s Cai. “Without economic incentives, it’s very difficult to expect the ecosystem to self-start or jump.”

Cai said that Singapore is still at the “beginning of the journey”, having just launched EQDP in 2025; she noted that further initiatives such as the Value Unlock programme are set to further catalyse growth.

Dr Li added: “What is truly driving the attractiveness of the market or the segment is the fundamental growth prospect.

“Once you have that, you have research analysts who have this growth prospect to be seen by the investors, and then you know the fund flow or the liquidity will just follow.”