Green listings are the way to go for Singapore's capital markets

The region faces a funding crunch as it transitions towards net zero. Singapore can help plug the gap.

- Clifford Lee and Kelvin Wong

In August 2024, the Monetary Authority of Singapore (MAS) announced the formation of a review group to strengthen Singapore's equities market. Many suggestions have been made since then. These include studying how other markets have revitalised themselves, and enhancing aspects of the local regulatory regime.

The group—which is split into the enterprise and markets workstream and regulatory workstream—has an exciting mandate. Among its objectives is to build on what is effective and to identify new growth opportunities. Second Minister for Finance Chee Hong Tat, who chairs the review group, emphasised an important perspective: instead of competing directly with larger exchanges, Singapore should focus on "adding value by playing to its strengths".

One area for further exploration is to leverage the country's leadership in sustainable finance to strengthen Singapore's equities market.

FINANCING ASIA'S NET-ZERO TRANSITION As the global transition towards net zero picks up pace, so will the need for financing. Asia faces an acute shortfall—the region requires at least US$1.1 trillion (S$1.48 trillion) annually in climate financing, but currently faces a staggering US$815 billion shortfall each year, according to International Monetary Fund data.

Much of this financing need is driven by capital-intensive infrastructural projects, which often look to public debt and bank loans for support.

There is also a need to help scale up companies which provide products and services that address environmental or social issues. Depending on the size of these businesses, or the scale of their solutions, debt and loans may not be the most suitable funding channel.