Why was EQDP necessary in the first place?

THERE has been a fair bit of debate recently over how the momentum generated by Singapore’s Equity Market Development Programme (EQDP) can be sustained because share prices have risen, liquidity has improved, and confidence has returned to the local bourse. 

Yet, a more fundamental – and more uncomfortable – question deserves to be asked: Why was the EQDP necessary in the first place? If markets allocate capital efficiently, why do policymakers across the world have to regularly intervene to rescue, repair or re‑engineer them?

After all, markets are supposed to reward productive enterprise, discipline weak companies and channel capital to its best use. The reality, though, is modern equity markets are riddled with structural distortions and biases.