Critics of the MAS grant program raise concerns about whether financial incentives can truly solve the underlying issues facing the Singapore Exchange. While grants may increase the number of listings, skeptics argue that they do not address the fundamental challenges of low trading liquidity and limited analyst coverage. There is a risk that the program might attract companies that are not yet ready for the scrutiny of public markets, potentially leading to poor performance and diminished investor confidence.
One of the primary concerns is the quality of the companies being brought to market. If firms are listing primarily to take advantage of subsidies rather than because they have a robust business case for public capital, the long-term health of the exchange could suffer. Investors often look for sustainable growth and strong governance, and there is a fear that an artificial boost in listing numbers could mask a lack of organic market demand. This could lead to a 'hollow' market where the number of companies is high, but trading activity remains stagnant.
Additionally, some market observers suggest that the focus should be on improving the ecosystem for investors rather than just subsidizing the costs for issuers. Without a deep pool of active traders and a vibrant research community, even the most well-funded IPOs may struggle to gain traction. Critics argue that the government's resources might be better spent on initiatives that improve market transparency, enhance corporate governance standards, or incentivize institutional participation.
There is also the question of sustainability. If the market requires ongoing government support to remain attractive to new listings, it raises doubts about its ability to function independently. A truly healthy equity market should be self-sustaining, driven by the natural demand for capital and the potential for investor returns. Relying on grants could create a dependency that makes it difficult to transition back to a market-driven model in the future.