The struggle for coverage of smaller companies

ONE way to stimulate more trading in the local stock market and possibly stem the rising tide of delistings is through better research coverage of small-to-mid-sized stocks. The authorities know this and have played their part over the years to try and encourage research houses to broaden their scope beyond just the blue chips and larger companies. Although there was some early success, a lasting solution has proven elusive.

The latest attempt came in February 2019 when the Monetary Authority of Singapore (MAS) unveiled its Grant for Equity Market Singapore (Gems) scheme, valid until the end of 2023. At the time, the MAS stated: “Enhanced research coverage, particularly for mid and small-cap enterprises, can help improve investor knowledge, which will in turn facilitate price discovery and liquidity.”

The Gems scheme included a Research Talent Development grant designed “to groom a pipeline of equity research analysts and retain experienced research talent to initiate research coverage primarily of listed mid and small-cap enterprises’’.