A lot of bull: As STI breaches 5,000, what more can we call for?

THE Straits Times Index (STI) crossed the 5,000 mark as Finance Minister Lawrence Wong delivered Budget 2026 last Thursday (Feb 12). The significance of 5,000 – apart from being the latest in a series of all-time highs reached since it bested the November 2007 high of 3,800 last February – is that it was the bull case first made by JPMorgan last July.

As the market rebounded off US President Donald Trump’s April tariff wobble, we were testing the unthinkable 4,000 point resistance. A clean break, one hoped, will finally relieve us from the shackles of the last equity bubble top that proved a cap on our psyche, leading to persistent undervaluation.

JPMorgan called for base and bull targets for the STI at 4,500 and 5,000 points by the end of last year. Perhaps they could have qualified that the targets referred to the end of the Year of the Snake. They would have been spot on.

Sceptics of the first Equity Market Development Programme (EQDP) deployment by the Monetary Authority of Singapore questioned why JPM Asset Management was given the lion’s share of the US$1.1 billion last July, along with local stalwarts Avanda and Fullerton. It was, after all, “international” – that is, foreign – a player whose expertise was in big blue chips and not the “smids” (small and mid-caps) that required more attention.

A curious coincidence followed, with JPM’s research arm almost immediately – independently – coming to its bullish conclusion in late July. Local investors were then still largely fixated on US tech stocks or Bitcoin.

As the market rewarded its believers, the JPM team on Oct 24 laid out a roadmap on how the STI would get to 5,000, then 6,000. With cynics and naysayers still nursing foreign portfolios and perma bears on the Singapore stock markets still hibernating, the market has proven them wrong. It is the old adage, after all, that only when the last bear turns bull, it signals the market top.

Some concerns were reflected in questions brought up in Parliament a week before the Budget, by Workers Party Members of Parliament. They argued for mandatory “value up” additional disclosure requirements while lamenting about declining liquidity.

Rome was not built in a day. But the last six months’ targeted roll out of various measures to strengthen the local equities market had already lifted many sampans to a multiple of their stock prices a year ago.

The limited grant sizes per company for the “Value Unlock” programme will probably be expensed on additional compliance and reporting, instead of needed sustainable investments in professional investor relations capabilities.

For a long tail of smaller companies, the quantum will not cover hiring dedicated qualified staff. Sure, more disclosures will make life easier for an analyst, but it is questionable whether any listed company should bother if we tie this with additional regulatory burdens.

Ironically, the genesis of these laments was predicated on calls for “bolder reforms”. Being bold means taking some risks, and weaning ourselves from being “champion complainers”.

From wanting to have our cake – of a vibrant, liquid and exciting market with good valuations to help capital raising and price discovery – and eating it with so many safeguards that result in no fish in the swimming pool.

We must be tough on nefarious actors, but recognise that unfortunately, regulatory action can only come after a bad actor has ruined the stage or committed a crime. Some people will get hurt.

So we must be prepared for taking the risks of investing or trading on forward-looking statements issued in good faith by companies, and not go overboard with creating a new litigious culture of public-funded class action process. This will only deter our already generally risk-adverse boards from making proactive sensible commercial disclosures.

It is therefore heartening to see some follow-on in the Budget, with a S$1.5 billion top-up to the Financial Sector Development Fund that funded the EQDP, even if we do not yet have institutionalised mechanisms for annual regular inflows.

If a global market is what we want, we should also question the SGX Board lot consult proposal.

It makes no sense to create more accessibility for retail investors to be able to buy 10 shares of stock in a range of S$10 to S$100, only for them to suffer the injury of being unable to cut loss if the stock falls into the lower range which requires 100 shares to transact.

The real issue of an irritating “sub-optimal” trade size that causes annoyance to investors and traders is one of minimum commissions charged by brokers. Some progressive newer platforms already offer zero minimum commissions.

We should just bite the bullet and shift the whole market to unit shares, and get rid of the inefficient odd lot market that investors are sometimes forced into as a result of corporate actions.

If the goal is retail accessibility, then let us not take more half-steps. Why not also allow fractional investing, where financial intermediaries enable investors to buy S$500 of DBS shares instead of figuring out if it is a 1, 10 or 100 board lot?

In moving ahead with fractional investment, we would not only be catching up with the US. Malaysia, which launched fractional share trading in April 2025, is there already.

The writer is chairman of Shan De Advisors. He retired in 2021 from the Singapore Exchange, where he was a senior managing director.