Use CPF to revive waning Singapore stock market: SBF

Business leaders want to separate CPF from investment limits.

Major local business leaders are calling for workers’ Central Provident Fund (CPF) to be used to revive Singapore’s “moribund” stock market.

A position paper by the Singapore Business Federation (SBF) noted that the local stock market has lagged behind the country’s growth as a major financial centre. In 2012, the market capitalisation plummeted to 142% of GDP from 2005’s market capitalisation of 248%, making Singapore significantly less attractive as a listing venue.

“The Government should consider separating the CPF component and managing it differently as how pension funds are managed. This will free these funds from the GIC investment restrictions and will likely result in some investments in the Singapore market. These investments will send strong signals on our market to other investment professionals,” the position paper asserted.

The paper also noted that the way the CPF funds eventually flow back into the local market will serve as a barometer of local bourse Singapore Exchange's efforts to make the flagging market more attractive.

Further, the growth of local companies allow for a furthered scope to develop other market platforms “to address the gap between Catalist and the SGX Mainboard.” This would thereby attract companies with stable performances but are relatively moderate in size.

“These companies will find comfort amongst their peers and will not have to fight with the other classes of companies for market attention. As we widen the investor pool, this additional platform can differentiate the listed companies for more targeted attention by investors,” the paper stated.