MAS can give much needed boost to Singapore equity markets

THE Monetary Authority of Singapore (MAS) should consider emulating the equity investment strategies of the Bank of Japan (BOJ) and Swiss National Bank if it seeks to revitalise Singapore's troubled equity capital markets, amid concerns about their future.

Since the global financial collapse of 2008, both central banks have aggressively pursued equity investment strategies to stimulate their economies. In the BOJ's case, since 2010 it has purchased beneficiary interests in exchange-traded funds (ETFs), corporate bonds, foreign mutual funds and real estate securities.

The BOJ appoints trust banks, which establish a money trust that subsequently purchases ETFs and other investment securities at a volume-weighted average price. Due to the broad indices and themes mandates, this permits the capture of the market at large. This policy has had the effect of underwriting liquidity in Tokyo's capital markets, as well as spurring the growth of Japan's ETF universe.