Small- and mid-cap stocks becoming more investable: Manulife

Improved liquidity and research coverage could attract more institutional capital.

Singapore’s small- and mid-cap stocks are becoming more accessible to investors as trading liquidity, analyst coverage and institutional participation improve, according to Manulife Investment Management.

The investment manager said these developments were expanding opportunities beyond the largest constituents of the Singapore Exchange.

The number of SGX-listed stocks exceeding $1m in average daily trading value rose from 72 in December 2022 to 100 in June 2026, based on data presented in the report.

Small-cap stocks accounted for much of the improvement, with 71 exceeding the threshold in June 2026, up from 43 in December 2022.

Manulife said greater trading depth could make it easier for institutional investors to establish and adjust positions without materially affecting market prices. It could also support more reliable valuation signals and greater engagement between companies and shareholders.

Research coverage has similarly expanded. The number of SGX-listed companies receiving active sell-side coverage increased from 108 in December 2022 to 136 in June 2026.

Manulife attributed the improvement partly to market-development initiatives, including the Equity Market Development Programme and the Grant for Equity Market Singapore research scheme.

The programs are intended to channel more actively managed capital into Singapore equities and expand research coverage of smaller companies, including businesses preparing for or completing initial public offerings.

Manulife expects increased institutional participation to reinforce liquidity and price discovery. However, it said additional capital was unlikely to benefit all companies equally.

Investors are expected to favor businesses with sufficient trading liquidity, visible earnings growth, sound governance and credible capital-allocation policies.

The report also identified a valuation gap between small- and mid-cap stocks and their larger counterparts.

Based on the indices used in its comparison, SMIDs traded at 13.9 times earnings and 1.1 times book value, compared with 18.6 times earnings and 1.8 times book value for large-cap stocks.

SMIDs also offered a dividend yield of 5.9%, above the 4% yield for large caps.

A broader IPO pipeline could further expand the investable market, but Manulife cautioned against treating new listings as a uniform opportunity. Among 16 SGX Mainboard IPOs since 2025, 30-day returns ranged from a 36.2% loss to a 36.3% gain.

The firm said fundamental research remained necessary because business quality, governance, liquidity and balance-sheet resilience varied significantly across the segment.

Whilst improving market conditions could allow selected SMIDs to narrow their performance and valuation gaps with large caps, Manulife said low valuations alone did not guarantee a re-rating or stronger investment returns.