EQDP Ignites Small-Mid Caps: Key Stocks to Watch in 2H 2025
As Singapore's stock market enters the second half of 2025, a fresh wave of optimism is building around the Equity Market Development Programme (EQDP). Launched by the Monetary Authority of Singapore (MAS), this S$5 billion initiative is designed to inject much-needed liquidity into the local market, with a special focus on small and mid-cap stocks that have struggled in recent years.
Why EQDP Matters Now
Singapore's small and mid-cap segment has faced significant headwinds over the past few years. Liquidity has dried up, making it difficult for investors to trade shares without impacting prices. More concerningly, a noticeable “delisting wave” has emerged: by early 2025, five companies had announced plans to go private, reflecting challenges such as valuation pressures, limited investor interest, and competition from private equity and venture capital channels. This decline in market activity has made it harder for smaller companies to raise capital and for investors to find attractive growth opportunities.
The EQDP is MAS’s strategic response to this challenge. By committing S$5 billion to support local fund managers who will actively invest in a broad range of Singapore-listed companies—not just the large blue chips—the program aims to restore liquidity and confidence in the small-mid cap space. This initiative is expected to help stabilize valuations and encourage more companies to stay public or pursue listings on the Singapore Exchange (SGX).
What EQDP Brings to the Table
The EQDP is more than just a capital injection. It offers a comprehensive package of incentives and reforms to make Singapore’s equity market more vibrant and accessible:
1. Active Fund Management: The funds will be managed by experienced Singapore-based asset managers with proven track records. These managers will deploy capital actively across a diversified portfolio of stocks, focusing on companies with strong fundamentals and growth potential, rather than passively tracking indices.
2. Tax Incentives: To encourage participation, the government offers tax exemptions for fund managers investing heavily in Singapore-listed stocks. Additionally, companies seeking initial public offerings (IPOs) or secondary listings can benefit from corporate tax rebates—20% for new IPOs and 10% for secondary listings—making Singapore a more attractive listing venue.
3. Regulatory Streamlining: EQDP proposes a shift to a more disclosure-based listing regime, simplifying the approval process and reducing the time it takes to go public. The integration of listing suitability and prospectus review under the SGX Regulatory Company (SGX RegCo) aims to bring the listing timeline down to six to eight weeks, enhancing efficiency and investor confidence.
Timeline: What to Expect Next
Following the official announcement on February 21, 2025, MAS plans to shortlist fund managers in the third quarter of the year. These managers will then begin deploying capital by the fourth quarter.
This timeline sets the stage for a potentially transformative second half of 2025, where increased capital flows could revitalize the small-mid cap market and create fresh investment opportunities.
Stocks in the Spotlight: What Analysts Are Saying
Several leading brokerage firms and research houses have already published their lists of small-mid cap stocks they believe will benefit most from EQDP.
Analysts widely recognize ComfortDelGro, Frencken Group, and CSE Global as key beneficiaries of the MAS's S$5 billion Equity Market Development Programme (EQDP), given their strong fundamentals and sector positioning.
$CSE Global(544.SI)$ , specializing in engineering services for oil & gas, power, and infrastructure sectors, boasts a substantial order backlog and steady earnings, making it a stable pick amid infrastructure investments.
$ComfortDelGro(C52.SI)$
$Frencken(E28.SI)$
Beyond these, other stocks such as $Hong Leong Asia (H22.SG)$, $SIA Engineering (S59.SG)$, and $UMS (558.SG)$ have also been mentioned by multiple institutions as promising candidates to benefit from EQDP's capital inflows. These companies share traits like healthy cash positions, attractive valuations, and strong local revenue exposure, aligning well with the pprogram's focus on revitalizing Singapore's small and mid-cap market.
Sector Themes to Watch
The EQDP's impact is expected to be broad but focused on sectors with strong growth drivers and resilience:
1. Technology Manufacturing: Companies involved in semiconductor components, precision engineering, and electronics stand to benefit from ongoing regional demand and innovation.
2. Artificial Intelligence and Robotics: As AI adoption accelerates, firms providing automation and robotics solutions are poised for growth.
3. Transportation and Logistics: With Singapore’s strategic position as a regional hub, transportation companies like ComfortDelGro are well-placed to capitalize on economic recovery and increased mobility.
4. Healthcare Services: Aging populations and rising healthcare demand support growth in medical services and related sectors.
5. Consumer Goods: Domestic consumption and regional trade trends underpin opportunities in consumer-focused companies.
What This Means for Investors
For investors, EQDP represents a unique opportunity to participate in a revitalized Singapore equity market. The combination of fresh capital, tax incentives, and streamlined regulations creates a supportive environment for small and mid-cap companies to thrive. However, investors should remain mindful of risks, including the pace of capital deployment, global economic uncertainties, and company-specific factors.
By focusing on companies with strong fundamentals and those favored by multiple institutional analysts, investors can better position themselves to capture the potential upside as EQDP unfolds.
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