SGX’s Hidden Gems? 8 Quick Things You Should Know Before Investing

On one end, you have Singapore’s blue chips, prized by investors for their established business position.

On the other end is a less explored world.

Yes, I am talking about Singapore small-cap stocks.

As my colleague David Kuo puts it, this cohort often receives far less attention from analysts.

But this lack of coverage may make it easier to find undervalued stocks, he argues.

Investors will have to put in more legwork to unearth any hidden gems.

SGX’s Hidden Gems?

The natural question is where should you start?

How do you get familiarised with SGX small-cap stocks?

The FTSE Straits Times Small-Cap Index, with 42 constituents, is a good place to start.

Here are eight things you should know about the Index (data as of 17 June 2025, unless otherwise stated):

The index constituents range from the largest, namely investment firm Yangzijiang Financial Holding Ltd (SGX: YF8) with a market capitalisation of S$2.45 billion, to Manulife US REIT (SGX: BTOU) holding up the rear at S$139 million.

The vast majority of the stocks have a market cap under S$1 billion. But there are another 12 stocks that are trading above the billion-dollar threshold, including CapitaLand India Trust (SGX: CY6U) at S$1.38 billion, oil palm plantation owner Bumitama Agri (SGX: PBZ) and Frasers Hospitality Trust (SGX: ACV) both at US$1.34 billion.

REIT investors may be pleased to learn that the sector is well represented within the index. Beyond the three REITs above, there are another 14 REITs spanning shopping malls, industrial, commercial, hospitality, healthcare, and data centre properties.

Industrial REITs are represented by the likes of AIMS APAC REIT (SGX: O5RU), while the retail sector is championed by Starhill Global REIT (SGX: P40U) which has stakes in the iconic Ngee Ann City and Wisma Atria and Lendlease REIT (SGX: JYEU), the owner of JEM and 313 shopping mall.

For data centre REITs, there’s Digital Core REIT (SGX: DCRU) while the hospitality sector boasts the likes of CDL Hospitality Trust (SGX: J85). If you are looking for something different, United Hampshire US REIT (SGX: ODBU) owns 22 assets ranging from groceries and necessities, and self-storage properties.

Elsewhere, if semiconductor-related stocks are your cup of tea, then you may want to check out test-equipment maker AEM Holdings (SGX: AWX), high-precision parts manufacturer UMS (SGX: 558) or mechatronics solution provider Frencken Group (SGX: E28).

Speaking of technology, coating solution innovator Nanofilm (SGX: MZH) and internet-of-things solution provider Aztech Global (SGX: 8AZ) stand out as candidates for a deeper dive.

Finally, Singapore Exchange (SGX: S68) has recently shared the best-performing small cap stocks from the index. Topping the list is instant coffee maker Food Empire (SGX: F03), logging a 93% total return year-to-date. The next best performers include YZJ Financial at 78% and worker accommodation provider Centurion (OU8) at 65%.

Get Smart: Small caps

Investing in small-caps stocks is not for everyone.

And that’s okay.

Not all the stocks in the index will be worth your time or dollars.

But the index provides a starting point.

Whether your preference is a big blue-chip company or a small-cap business, what’s important is how the underlying business is doing.

We also have to determine if the business can continue to perform over the long run.

The best quality of a small-cap is that it may have room to expand due to its size, so be sure to make that part of your consideration.

On the other hand, the smaller size of the business could make it more vulnerable.

In this case, a diverse portfolio may be your best way forward.

First-time investors: We’ve finally released our Beginner’s Guide. Read it in an afternoon, follow the principles, pick an investing style and buy your first SGX stocks within the next few hours! Click here to download it for free.

Disclosure: Chin Hui Leong owns shares in AEM and SGX.

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