OCBC Investment Research
Date of Report: 25 September 2025

Singapore Equities Get a Booster: SGX’s iEdge Singapore Next 50 Index Ushers in a New Era for Investors

Introduction: Singapore Equities Enter a New Growth Phase

Singapore’s equity landscape is undergoing a transformation. In a strategic move to broaden investor participation and invigorate valuations beyond traditional blue-chip names, the Singapore Exchange (SGX) has launched the iEdge Singapore Next 50 Indices. This new suite of indices provides investors with unprecedented visibility into the next tier of large and mid-cap Mainboard-listed companies, excluding the Straits Times Index (STI) mainstays. As fund managers begin to adopt these indices as benchmarks and roll out accessible investment vehicles, a virtuous cycle of liquidity and valuation uplift could be on the horizon.

Key Highlights: The iEdge Singapore Next 50 Indices Explained

SGX’s iEdge Singapore Next 50 Indices track the performance of the next 50 largest companies on the Mainboard, excluding the 30 with the highest market capitalisations. The indices come in two variants: the standard market-cap-weighted index and a liquidity-weighted version.

The indices collectively cover a market capitalisation of SGD42.3 billion as of 29 Aug 2025.
The largest sectors are Real Estate, Industrials, and Financials.

Performance Review: Outperformance and Sector Dynamics

Back-tested total returns for the iEdge Singapore Next 50 Index reveal robust performance. The index outpaced both the MSCI Singapore Index and the STI in four out of the last ten years (2015-2024), and delivered strong year-to-date (YTD) returns in 2025, outperforming the STI but marginally lagging the MSCI Singapore Index.

Sector Composition of the iEdge Singapore Next 50 Index

– Real Estate: 45.6% – Industrials: 15.1% – Financials: 10.6% – Consumer Staples: 8.1% – Communication Services: 6.5% – Materials: 5.8% – Information Technology: 3.1% – Health Care: 2.9% – Energy: 1.5% – Consumer Discretionary: 0.7%

Investment Implications: Opportunities and Cautions for Investors

Small and mid-cap companies (SMIDs) in Singapore have seen strong share price momentum, partly driven by the SGD1.1 billion deployment under the Equity Market Development Program (EQDP). The new index is positioned to further encourage participation and could see fund managers introduce ETFs and other vehicles to track its performance, broadening liquidity and pushing valuations higher.
However, investors should be cautious:
Many SMIDs have already experienced sharp rallies this year, some potentially ahead of fundamentals.
There is debate whether SMIDs will sustain valuations above historical averages.
The risk/reward in some names is becoming less attractive, particularly given macroeconomic uncertainties.
Many SMIDs have limited research coverage, placing the onus of due diligence on investors.
The upcoming 3Q25 reporting season will be crucial to assess if EPS growth justifies valuation multiples and corporate actions to boost shareholder returns.

Top Analyst Picks: Quality Amid Market Exuberance

Analysts recommend focusing on quality companies with strong fundamentals instead of chasing recent rallies. Below are the preferred picks among index constituents under coverage, including their fair value (FV), last price, and potential upside.

Full List of iEdge Singapore Next 50 Index Constituents

The index is diversified across multiple sectors and features a wide range of prominent Singapore-listed companies, from infrastructure and REITs to technology and consumer staples.

Additional Eligible Stocks: Future Index Candidates

Beyond current constituents, several other stocks meet eligibility criteria and could be future index candidates, including Banyan Tree Holdings, AEM Holdings, Q&M Dental Group, Oiltek International, and Manulife US Real Estate Invest.

Market Outlook: Reforms, Resilience, and Opportunities Ahead

The Monetary Authority of Singapore (MAS) is set to appoint more asset managers under the second tranche of the EQDP by 4Q25. Market reforms continue to be reviewed, with more announcements anticipated by the year-end. Singapore’s defensive status, strong SGD, and attractive yields underpin an Overweight rating for local equities.

Conclusion: A New Era for Singapore’s Equity Market

The iEdge Singapore Next 50 Index marks a pivotal moment for Singapore’s market, broadening the investment universe and offering fresh opportunities. Investors should remain selective, prioritizing quality over exuberance, and closely monitor earnings and fundamental developments as the market enters this new phase.