Enhanced bourse appeal may lift Singapore’s investment banking space

Efforts to reform the stock market could also benefit wealth management income.

Singapore’s investment banking sector is expected to benefit from state efforts to reform its stock exchange to boost public listings, mergers and acquisitions (M&A).

The city-state’s strategic location, expanding consumer market, and cutting-edge tech would continue to lift the sector this year, Elaine Tan, senior manager for deals intelligence in Asia-Pacific at the London Stock Exchange Group (LSEG), told Asian Banking & Finance.

“These elements could drive growth and activity in Singapore’s investment banking sector, albeit with some moderation due to global economic uncertainties,” she said in an emailed reply to questions.

Government initiatives, including a $5b equity market development programme, tax exemptions for fund managers investing in Singapore-listed stocks, and requiring single-family offices to invest in the bourse are likely to lead to more M&As, according to RHB Group.

Investment banking and advisory firms would gain from the increased attraction for entrepreneurial companies to acquire undervalued firms listed on the exchange and inject their own profitable companies into the public entity, RHB analyst Shekhar Jaiswal said in a report this month.

Small, listed companies with strong cash flow might also get delisted and relisted on the exchange when their valuation gets higher, he added.

“We see it as a big positive for Singapore equities and believe that this could bring in greater investor interest and broaden investor participation beyond index stocks,” he said.

Whilst Singapore’s stock exchange experienced a 6.5% increase in capital proceeds in 2024, volume fell 7%, according to LSEG data.

Tan said a number of Singapore companies, notably many local issuers, have opted to list on global exchanges including those in the US.

“Whilst the local exchanges [in Singapore and Hong Kong] have their own advantages, the US markets offer greater liquidity, a more diverse investor base, and global visibility, making it an attractive choice for companies looking for growth and expansion,” she added.

Efforts to reform the stock market should be positive for banks’ wealth management income as well, Jaiswal said.

Last year, Singapore’s investment banking fees rose 14% to $884.8m (US$660.6m) from a year earlier, spurred by increased M&As and bucking a downtrend in the Asia-Pacific region, based on LSEG data. It ranked sixth overall, excluding Japan.

Its M&A space grew the fastest at 41% to $109.8m (US$82m). China, South Korea, and Hong Kong all posted declining investment banking fees.

“The real estate, financials, and material sectors collectively captured 49% of the market share in terms of deal value,” Tan said.
The high-tech sector ranked first in terms of deal volume, reflecting a strong focus on technological advancements and expanding digital capabilities, she added.