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Reply to Parliamentary Question on retail investors’ fund outflows to overseas exchanges and turnover on SGX

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QUESTION NO 1981

NOTICE PAPER 792 OF 2021

FOR WRITTEN ANSWER

Date: For Parliament Sitting on 1 November 2021

Name and Constituency of Member of Parliament

Mr Saktiandi Supaat, MP, Bishan-Toa Payoh GRC

Question: 

To ask the Prime Minister (a) whether the Government tracks retail investors’ monthly fund outflows from Singapore that are invested into stocks and derivatives traded on overseas exchanges; (b) if so, what is the data for the past 12 months; (c) whether the Government has conducted any survey of the top three overseas exchanges used by Singaporeans to trade; (d) what is the Government’s assessment of the volume of trade turnover on SGX; and (e) what is being done to improve the turnover and make Singapore more attractive to investors. 

Answer by Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS:

1 Mr Speaker, MAS does not have data on retail investors’ monthly fund outflows to overseas exchanges or where they are deployed, as many trade directly on overseas exchanges without going through retail brokerages based in Singapore. Of those who trade on overseas stock exchanges through such Singapore intermediaries, we estimate [1]  that approximately half of retail investors’ fund flows remain in Singapore, while the other half flows overseas, with the US, Hong Kong and Thailand being the top three overseas stock markets.

2 Financial institutions in Singapore offer a range of investment options in both local and overseas markets for market participants here, including retail investors. From an investor point of view, it is not undesirable to diversify  investments across markets and types of assets, including through instruments offered on SGX, as long as investors understand the nature of the risks and benefits of doing so.

3 Turnover on SGX has increased in the midst of COVID-19, although it has been outpaced by competitor exchanges. SGX’s total equity monthly turnover has grown by about 20% since early 2019. SGX has traditionally had more active volumes in less volatile, income-generating investments, such as REITs, compared to other growth-focused exchanges, such as NASDAQ [2] .

4 To narrow the gap with other exchanges and help drive turnover growth, SGX has introduced new and more flexible listing pathways to cater to new economy companies. These include listing frameworks for companies with dual class share structures, and more recently, the special purpose acquisition companies framework. SGX is also working with regional exchanges to build linkages and expand investor pools, as well as broaden its equity product shelf. To support secondary market trading, SGX has been building its ecosystem of market makers and liquidity providers.

5 Government agencies are supporting SGX’s efforts to increase the attractiveness of our equities markets for local and international investors. I will highlight a few recent initiatives:

a. The Government and Temasek are co-investing in a S$1.5 billion fund called “Anchor Fund @ 65”, to provide late-stage pre-IPO funding and to attract and anchor new listings of growth companies on SGX.
b. EDBi, the investment arm of EDB, is establishing a new “Growth IPO Fund” to invest in future market leaders and technology innovators that are two to five years away from a public listing, with a view towards having them list on SGX.
c. MAS defrays listing costs for companies looking to list on SGX and encourages more equity research on smaller, and less covered, Singapore-listed stocks through its Grant for Equity Market Singapore (GEMS).

6  These steps are part of a continuing strategy to develop depth and breadth in our capital markets, including strengthening our role as a capital-raising venue for promising firms in the region and beyond. This is ultimately what will draw retail and institutional investors alike to our capital markets.

[1] Estimates are based on revenue that local retail brokers derived from various securities markets.

[2] According to the latest available data from the World Federation of Exchanges, turnover for NASDAQ grew by 42% over the same period.

This news item was originally published by the Monetary Authority of Singapore (MAS SG). For more information, please see the Source Link.

Regulator Information

Abbreviation: MAS
Jurisdiction: Singapore

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