Equity Market Development Programme: We’ve built the field, now will the players come?

IN THE 1989 fantasy movie Field of Dreams, Iowa farmer Ray Kinsella (played by Kevin Costner) clears his cornfield to build a baseball diamond after hearing a voice promise: “If you build it, he will come.”

Kinsella risks financial ruin and ridicule, banking on a vision that a famous player of the past will return. (Spoiler: Many ghosts did come, including Kinsella’s long-departed father. They reconcile, making for a typical happy Hollywood ending.)

In a similar vein, regulators here are clearing the weeds and building new infrastructure through the Equity Market Development Programme (EQDP). They have streamlined listing requirements, removed the watchlist, provided grants for research and to help smaller companies improve their investor relations, given billions to fund managers, and most recently, established a dual listing framework with Nasdaq.

They have built the field. Now the question is: Will the listings come?

Clearly, while bolstering demand, the authorities have simultaneously recognised that revitalising the supply side of the market is equally essential. After all, a vibrant equities ecosystem is not built solely on existing stocks – it requires a steady flow of high-quality and exciting new listings.

The streamlining of rules for dual listings here and on Nasdaq is therefore a brilliant first step, as are tax incentives and a faster regulatory review. Most commentators have rightly welcomed the Nasdaq tie-up, although some have expressed reservations because of the minimum S$2 billion market cap requirement.

How many will come?

Now if the framework aims to attract tech unicorns, how many will come? The local market’s track record in attracting top-quality startups has not been good, at least judging by the dismal experience with Special Purpose Acquisition Companies (Spacs). Moreover, the poor Spac showing suggests that there are very few truly promising, elusive unicorns floating around waiting to be discovered and those that are worthwhile may have already been listed in the US or Europe. Still, the prospect of a simultaneous listing on Nasdaq could offer sufficient enticement so there is room for optimism. Only time will tell.

A world-class field needs a strong feeder system. But the Catalist board has struggled to nurture promising players into big league contenders. How does it fit with all the reforms?

Catalist – and its predecessor Sesdaq – was set up to be a proving ground for small, possibly loss-making but promising companies to raise capital with the hope that over time they would grow and become profitable.

The listing framework was loosened to attract as many rough diamonds as possible. The problem is very few of the right quality came.

This column has raised the issue in Efforts to improve stock market should also scrutinise Catalist (Jan 14, 2025), pointing out that many Catalist firms started out as loss-making – and remained so for several years after. Observers have correctly pointed out that for the most part Catalist has not lived up to its promise of functioning as a nursery for promising growth firms.

If the EQDP is about raising the quality of the market, then perhaps it’s time to study what needs to be done to keep Catalist relevant. A revamp might be needed in order for the market to fulfil the other urging of the astral voice in Field of Dreams, which was to “go the distance’’.