Singapore’s capital market research scene trapped in ‘chicken-and-egg’ situation: DBS’ Han Kwee Juan
Research can boost trading activity, but such movement itself is needed to justify funding the work, he says
[SINGAPORE] Capital markets in Singapore might be sluggish due partly to a lack of research capabilities – but market activity itself is needed to support such research, said Han Kwee Juan, group executive and group head of institutional banking at DBS.
In this “chicken-and-egg” situation, research is important for investor interest – yet must also be financially justified, he said in a panel discussion on Tuesday (Mar 18).
“If you do research without underlying capital market activities, then it becomes very expensive to maintain a research company,” he added. “A lot of research is paid (for) by deal flows in the market, and if there’s no deal flow, you can’t fund the research house.”
In a post-Budget dialogue organised by The Business Times, Second Minister for Finance and National Development Indranee Rajah asked Han if Singapore had enough research capabilities and robust valuation services.
She noted feedback “that not enough research companies (are) anchored” in the Republic.
But beyond research capabilities, business owners themselves must communicate better, said Han.
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If they cannot communicate well about their companies and growth plans, “no amount of research is going to yield anything, because you’re not going to share much for people to write about”, he said.
Executives need to be trained to talk about what their businesses look at, why they are growth companies, and why it is exciting to invest in them, he continued.
As for valuations, prices are determined by the markets, he said. “The magic happens” when businesses communicate their growth plans well, then deliver.
It takes time for investors to trust what is being communicated and researched, before jumping into investments, he added.
Singapore’s capital markets were among the topics in the dialogue, moderated by BT deputy news editor Anita Gabriel, alongside concerns about manpower and innovation.
Ironically, while Singapore is a wealth hub with trillions of dollars under management, a lot of the money flows out as “exciting” companies are not listed here, Han said.
Noting that popular local stocks tend to be the banks, real estate investment trusts and Temasek-linked companies, he said the nature of local listings must change to attract interest.
The recently announced Equity Market Development Programme may provide a boost, but to hold investors’ interest, companies themselves must be exciting enough and receive the right valuations, he said.
Indranee added that the government aims to galvanise equity market activity across the board, not specific sectors. In picking “certain winners”, there is always a danger of placing the wrong bets, she said.
“What you want to do is spread it around and encourage each sector, each area, to push as far as they can go, and then hopefully be able to make a breakthrough.”
As for whether recent delistings and prolonged weakness put Singapore’s equity market at risk of a broader decline, Han said delistings are not necessarily bad.
After all, capital markets go beyond the local stock exchange, he noted.
Maintaining a public listing can be a financial and regulatory burden. Meanwhile, the private market is thriving. Delisting could thus allow companies to secure funding or credit privately, to scale up very quickly.
“If you have a thriving ecosystem of private and public, then you might find some who are actually willing to move from the private space into the public again, and then back and forth,” he said.
“I think that, in itself, is something that we shouldn’t discount.”
Various sources
In the dialogue, manpower and financing were cited as key for transformation.
For large-scale capital expenditure, businesses can tap three different markets, said Han, referring to bank loans, the public market and the private market.
First, he noted that banks “are flush with deposits and are still trying to deploy loans”, while businesses are doing well and paying down debts. There is therefore “money chasing the right kinds of projects”.
Second, public bond markets and public equity markets such as the Singapore Exchange are another source of funds.
Finally, the market for private equity or private credit is growing, he said, highlighting Budget 2025’s S$1 billion Private Credit Growth Fund.
With these three sources, money is always available and not a constraint, Han said. “The question is really around the kinds of projects as well as the sponsors behind the projects.”
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