Channelling CPF balances to invest in local equities can help lift Singapore market: Morgan Stanley

The Edge Singapore 11-19

Better liquidity begets higher valuationsThe Singapore stock market has outperformed regional peers and gained a third year to date. Morgan Stanley believes that 2025 could be another "fruitful" year,...

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Morgan Stanley believes that 2025 could be another \"fruitful\" year,...</p>\n\n<a href=\"https://www.theedgesingapore.com/news/singapore-economy/channelling-cpf-balances-invest-local-equities-can-help-lift-singapore-market?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS\">Source Link</a>\n\n</div>\n","source":"edge_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Channelling CPF balances to invest in local equities can help lift Singapore market: Morgan Stanley</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nChannelling CPF balances to invest in local equities can help lift Singapore market: Morgan Stanley\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-19 10:59 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.theedgesingapore.com/news/singapore-economy/channelling-cpf-balances-invest-local-equities-can-help-lift-singapore-market?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS><strong>The Edge Singapore </strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Better liquidity begets higher valuationsThe Singapore stock market has outperformed regional peers and gained a third year to date. Morgan Stanley believes that 2025 could be another \"fruitful\" year,...</p>\n\n<a href=\"https://www.theedgesingapore.com/news/singapore-economy/channelling-cpf-balances-invest-local-equities-can-help-lift-singapore-market?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0267386448.USD","symbol_name":"FIDELITY FIRST ALL COUNTRY WORLD \"A\" (USD) INC","start_time":0,"source_url":"https://www.theedgesingapore.com/news/singapore-economy/channelling-cpf-balances-invest-local-equities-can-help-lift-singapore-market?utm_source=Blog&utm_medium=RSS&utm_campaign=Tiger_Brokers_app_RSS","article_id":"2484907194","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2484907194","pubTimestamp":1731985149,"columns":[],"sourceInfo":{"source_id":"edge_highlight","name":"Edge"},"weMediaInfo":null,"summary":"Better liquidity begets higher valuations","collect":0,"end_time":0,"defaultTopTitle":"theedgesingapore.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0267386448.USD":"FIDELITY FIRST ALL COUNTRY WORLD \"A\" (USD) INC","LU0320765646.SGD":"FTIF - Franklin Income A MDIS SGD-H1","BK4588":"碎股","IE00BZ1G4Q59.USD":"LEGG MASON CLEARBRIDGE US EQUITY SUSTAINABILITY LEADER \"A\"(USD) INC (A)","LU0106831901.USD":"贝莱德世界金融基金A2","LU0314104364.USD":"MANULIFE GF AMERICAN GROWTH \"AA\" (USD) INC","LU0006306889.USD":"SCHRODER ISF US LARGE CAP \"A\" (USD) INC AV","LU0106261372.USD":"SCHRODER ISF US LARGE CAP \"A\" ACC","LU0225283273.USD":"SCHRODER ISF GLOBAL EQUITY ALPHA \"A\" (USD) ACC","LU1720051017.SGD":"Allianz Global Artificial Intelligence AT Acc H2-SGD","BK4504":"桥水持仓","CPF":"中央太平洋银行","BK4581":"高盛持仓","LU1548497426.USD":"安联环球人工智能AT Acc","BK4127":"投资银行业与经纪业","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","LU1668664300.SGD":"Blackrock World Financials A2 SGD-H","LU0971096721.USD":"富达环球金融服务 A","BK4516":"特朗普概念","LU1720051108.HKD":"ALLIANZ GLOBAL ARTIFICIAL INTELLIGENCE \"AT\" (HKD) ACC","LU2357305700.SGD":"Allianz Global Artificial Intelligence ET H2-SGD","BK4585":"ETF&股票定投概念","BK4534":"瑞士信贷持仓","LU1363072403.SGD":"Fidelity Global Financial Services A-ACC-SGD","LU1989772840.SGD":"CPR Invest - Climate Action A2 Acc SGD-H","LU0098860793.USD":"FRANKLIN INCOME \"A\" INC","LU1989772923.USD":"CPR Invest - Climate Action A2 Acc USD-H","BK4211":"区域性银行","LU1162221912.USD":"FRANKLIN INCOME \"A\" (USD) ACC"},"translate_title":"摩根士丹利：引导公积金余额投资当地股票有助于提振新加坡市场","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"CPF":1},"content_text":"Better liquidity begets higher valuationsThe Singapore stock market has outperformed regional peers and gained a third year to date. Morgan Stanley believes that 2025 could be another \"fruitful\" year, says Morgan Stanley.\nAs part of a raft of impending changes seen to help uplift the local bourse, the US bank believes that the CPF funds will be a key source of capital to boost valuation multiples by up to a fifth.\nIn its base case, Morgan Stanley sees Singapore's PE rerate to above-trend levels of 14x, and up to 16x in its bull case.\n“The combination of seemingly stronger political will and low market expectations drives our conviction that soon-to-be announced initiatives will likely have a meaningfully positive market impact, even if their exact details are still to be fleshed out,” states Morgan Stanley on Nov 18.\nMorgan Stanley, echoing what market participants and observers have been lamenting for years, says that the low trading liquidity of Singapore stocks has over the years led to a vicious cycle of lower institutional investor interest, lower stock valuations, de-listings outpacing new listings, and lower institutional investor interest and trading liquidity.\n“Finding the means to improve stock trading liquidity, we believe, is key to reversing this,” says Morgan Stanley, adding that better liquidity begets better valuation multiples through expanded institutional following, leading to an overall improvement in market vibrancy and attractiveness.\n“This in turn supports the venture capital and wealth management industries, enabling higher value add job creation and Singapore's ambitions of excelling as global financial hub more broadly,” says Morgan Stanley.\nOne way to inject liquidity is to tap on CPF savings. As at end of 2023, there was a balance of some $571 billion. CPF balance as a whole grew by some 9% per year over the past five years, with half from member contributions net of withdrawals, and the other half from credited interest estimated at 4%, generated by investing in Special Singapore Government Securities.\nAccording to Morgan Stanley, less than 5% of the total CPF balance is invested in local equities, substantially lower than that of 24% in Malaysia’s equivalent EPF and OECD average of more than 20%.\n“This suggests to us there is a lot of room to increase CPF fund allocations to equities, which would simply narrow the existing wide gap to peers globally,” says Morgan Stanley.\nThe US bank suggests that as part of the ongoing market review, half of the annual growth in CPF balances, or some US$15 billion, be allocated to the local market instead of government securities.\nOver a ten-year period, CPF's portfolio allocation would shift from a 95:5 mix of bonds-to-equities to a 70:30 mix more in line with the OECD average of 28% allocation to equities, says Morgan Stanley.\nTo secure buy-in from the industry ecosystem, Morgan Stanley suggests that the CPF balances to be channelled to local equities be allocated to “established local fund managers” to manage.\n“An approach adopted by pensions globally, such as Japan's GPIF, outsourcing stock selection expertise to third-party fund managers averts the need for the CPF board to develop in-house equity fund management capabilities, and could help revitalize the local fund management industry – which would likely boost global institutional interest in Singapore stocks as well,” says Morgan Stanley.\n“In their pursuit of performance fees, and perhaps to secure larger CPF mandates in the future, these fund managers would likely have to turn over their positions (as opposed to just buying and holding) to maximize portfolio returns. This would further boost the trading liquidity of stocks after the initiation allocation of AUM, which we think could lead to better valuation multiples,” the US bank adds.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"economic","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2484907194"}