- Continue from report – Singapore Small/Mid-Cap Equities: A Watershed Moment.
- With the policy backdrop in place, we see three key themes underpinning the outlook for the Singapore SMID sector.
- - Read this at SGinvestors.io -
- Valuations have re-rated, but attractive income opportunities remain –
- Beneficiaries of Singapore’s structural growth story –
Theme 1: Value unlocking amidst strategic capital allocation and investor engagement
- Founders/senior management of SMID companies may hold meaningful equity stakes in their companies. This creates a strong alignment of interest with minority shareholders, which consequently incentivises them to seek value-unlocking opportunities. We believe there are several levers that SMID companies can pull to unlock value for shareholders, and this is supported by policy tailwinds.
- - Read this at SGinvestors.io -
- While several S-REITs and asset managers have been actively pursuing capital recycling to rejuvenate their portfolios since 2H25 amid the resumption of rate cuts by major central banks, the start of the Middle East conflict has put such activities on the back burner given weaker investor sentiment. The two-week ceasefire that was announced could provide a boost to capital market activities again, although clearer signs of a longer-term or permanent de-escalation to the conflict would still be needed for companies to commit to their plans.
- Another important step for SMID stocks would be to strengthen investor engagement and awareness, as these stocks tend to be under the radar of most investors. Should funds from the EQDP be directed to the uptake of sizeable stakes in SMID stocks, this can help to increase investor engagement and create a positive feedback loop to drive improvements in operational improvements, disclosures and corporate governance.
- Increased analyst coverage of SMID stocks due to enhancement in the GEMS Scheme can help raise the profile of more stocks, thus helping to improve trading liquidity.
- Overall, as actions to improve transparency, shareholder engagement and profitability take centre stage, this can create a virtuous cycle of facilitating price discovery and potentially helping SMID stocks to narrow their valuation discount over time.
Theme 2: Valuations have re-rated, but attractive income opportunities remain
- Read more at SGinvestors.io.
