Singapore stock market rises after MAS gives $1.1 billion to 3 fund managers to invest in small-cap stocks

The Monetary Authority of Singapore’s decision to deploy $1.1 billion through three fund managers is more than a show of confidence in the local bourse—it marks a deliberate attempt to reshape domestic capital allocation dynamics. Amid years of tepid interest in Singapore’s equity market, particularly outside the blue-chip tier, this capital infusion signals institutional willingness to lead market repricing and expand liquidity beyond the Straits Times Index.

While Western policymakers remain preoccupied with inflation containment, MAS’s move points to a different posture: targeted liquidity expansion without altering policy rates. Structurally, this capital injection acknowledges that smaller market economies must take proactive roles in sustaining fund ecosystem viability, especially as passive flows and global allocators continue to overlook Singapore’s mid-cap and emerging growth stories.

The selection of Avanda Investment Management, Fullerton Fund Management, and JP Morgan Asset Management is not simply a matter of delegation—it is a form of signaling. These firms are not just asset stewards but institutional multipliers, chosen to amplify market confidence. Their mandate under MAS’s Equity Market Development Programme (EMDP) is not only capital deployment, but capital magnetism: the expectation is that institutional movement will encourage retail and foreign investors to follow.

This $1.1 billion is the first tranche of the broader $5 billion program announced in February 2025. By design, it favors funds with material exposure to Singapore equities, especially small to mid-cap strategies often sidelined in global portfolios. The upcoming expansion of the fund manager roster by Q4 2025 further underscores MAS’s intent to keep momentum alive.

Deputy Chairman Chee Hong Tat’s remarks that these investments are meant to “crowd in private capital” are not merely aspirational—they reflect a recognition that markets like Singapore cannot rely on organic demand alone. A well-anchored liquidity spine is needed to revive not just prices, but participation.

Singapore’s move echoes similar mechanisms seen in other small-market financial centers trying to offset capital concentration. For instance, Hong Kong’s push to incentivize tech listings and dual primary structures has mirrored an ambition to retain relevance amid mainland decoupling. Meanwhile, Saudi Arabia has leveraged sovereign funds to create demand depth in Tadawul for pre-IPO and secondary offerings.

But unlike HKEX or Tadawul, Singapore’s equity market has long been accused of stagnation—strong governance but low velocity. MAS’s approach now leans closer to a capital infrastructure upgrade: treat liquidity not as a byproduct, but as a system input.

This is a reversal of previous orthodoxy. Where once monetary authorities assumed equity liquidity would follow macro stability and private sector innovation, the present posture implies the opposite. Liquidity must be constructed if sector depth and index resilience are to follow.

The sharp rally in the STI to an all-time high of 4,273 on July 24 was partly sentiment-driven. Blue-chip stalwarts like DBS, Yangzijiang Shipbuilding, and DFI Retail Group benefited first. But what’s more revealing is the behavior in non-STI and Catalist stocks—namely, Nam Cheong, Oiltek, Nanofilm, and Lum Chang Creations.

These names do not typically lead sentiment. That they surged suggests early-stage reallocation and speculative momentum seeking under-owned stories. Whether these movements are sustainable is secondary. What matters for policy watchers is this: the MAS capital signal is actively altering market participation hierarchy.

SingPost’s partial divestment and ComfortDelGro’s rally—triggered more by analyst re-rating than fundamentals—reinforce that investors are repositioning ahead of expected liquidity tailwinds. The ecosystem effect has begun.

For years, local fund flows have favored property, fixed income, and overseas ETFs. MAS’s move implicitly acknowledges this misalignment and seeks to reset incentives. Domestic capital markets cannot deepen without domestic conviction.

Institutional allocation—especially if it expands to additional managers and continues through market cycles—can recalibrate that conviction. Importantly, this is not stimulus. This is structural seeding: the creation of a liquidity base layer for long-term participation, valuation discovery, and listing viability.

It also suggests MAS is aware of longer-term risks: a market without liquidity eventually becomes a market without listings. That’s the trajectory MAS aims to preempt.

The deployment of MAS capital is less about tactical returns and more about institutional repositioning. It reflects a broader policy recognition that liquidity is not passive—it must be architected. The selection of mixed manager types (local and global) ensures execution agility while maintaining jurisdictional relevance.

Markets may read this as a short-term bullish trigger. But the underlying move is quieter and more consequential: an attempt to re-anchor domestic equity markets by strengthening their structural appeal. This liquidity shift is not just intervention—it’s ecosystem design.