MAS’ third EQDP shot of S$1.45 billion a catalyst for small and mid-caps to catch up: JPMorgan
Earlier allocations from the programme have boosted liquidity but mid-caps have trailed the index.
JPMorgan has highlighted that the upcoming third tranche of Singapore's equity market development programme (EQDP) could serve as a catalyst for small and mid-cap stocks (SMIDS) to catch up. The programme, which has already injected S$1.45 billion, aims to foster market development in Singapore. While the first two allocations have fueled liquidity, SMIDS have been lagging behind the benchmark index.
The report estimates that a 30% allocation to SMIDS from the third tranche could bring in approximately S$435 million, equivalent to twice the average daily turnover volume of the iEdge Next 50 index. The STI has surged over 30% since the start of the EQDP, but SMIDS have underperformed the index by 25% year-to-date. The Monetary Authority of Singapore has allocated S$1.45 billion to the third batch of EQDP asset managers, with a fourth tranche expected by 2027.
Analysts suggest that resilient SMIDS with strong earnings, healthy balance sheets, and low interest rate exposure would likely attract investor interest.
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