Finance & insurance sector grew 4.3% in 2025, but fund management lagged due to November equity market decline and tighter global conditions.

Sector Performance Overview

Singapore's finance and insurance sector expanded by 4.3% in 2025, moderating sharply from the 7.3% growth recorded in 2024. According to the FPA Financial Singapore Financial Services Market View published in February 2026, growth was driven mainly by banking and insurance segments, supported by sustained credit intermediation under accommodative financial conditions and robust performance in life insurance. In contrast, the fund management segment saw notably subdued activity, reflecting weaker global market conditions that weighed on asset valuations and investor sentiment through the year.

Growth Rate (%)Source: Orionmano Industries

The deceleration from 2024's pace underscores a broader bifurcation within the sector. While banks benefited from sustained credit intermediation activity amid accommodative financial conditions, and the insurance segment was supported by strong life insurance performance, fund management failed to keep pace with the wider financial ecosystem.

Global Market Headwinds and Fund Management Activity

The fund management segment was weighed down primarily by the pullback in global equity markets in November 2025, according to the FPA Financial report. That month's equity decline—driven by renewed concerns over trade tensions and geopolitical instability—directly impacted asset valuations under management, compressing fee revenues and discouraging new capital inflows.

The Monetary Authority of Singapore's Financial Stability Review (November 2025) provided granular context on the risk environment. Financial institutions cited protracted conflicts in Eastern Europe and the Middle East, along with potential US-China frictions, as key areas of concern. Many noted how these conflicts could trigger energy and commodities supply shocks. Nearly a third of financial institutions citing geopolitics mentioned sanctions as a key risk of conflict escalation. The MAS report highlighted that sanctions could affect banks' and fund managers' operations by making compliance more costly, compelling the abrupt sale of assets that could lead to financial market volatility.

Beyond near-term credit and market risks, the MAS review noted that financial institutions were also wary of the persistent effects of trade tensions, which increasingly shape supply chain configurations in strategic sectors like technology and critical infrastructure. The IMF's 2025 Article IV Consultation for Singapore reinforced this caution, observing that after easing in 2024, financial conditions tightened in April 2025, with domestic interest rates—including the 3-month compounded SORA—continuing to decline from 3.6% in August 2024 to 2.5% in April 2025, mostly in line with US interest rates. The IMF noted that Singapore's financial sector could come under pressure from further tightening of global financial conditions, leading to higher FX borrowing costs, a reduction of cross-border capital flows, and a worsening in credit quality.

Regulatory and Industry Developments

MAS took significant regulatory steps through 2025 that will shape fund management operations going forward. In April 2025, MAS Managing Director Mr. Chia Der Jiun announced a review of the liquidity risk management framework for licensed fund management companies (LFMCs) during the annual Investment Management Association of Singapore Investment Conference. As detailed by Sidley Austin in their July 2025 regulatory update, this review aims to enhance the resilience of Singapore's fund management industry in both normal and stressed market conditions, aligning with calls from the Financial Stability Board and International Organization of Securities Commissions to reinforce consistency between a fund's investment strategy, liquidity, and redemption terms.

New notification requirements were also introduced for LFMCs. Effective in 2025, LFMCs must now report material adverse developments affecting their financial soundness or reputation, any CEO, director, substantial shareholder, or effective controller ceasing to be fit and proper, and any inability to conduct business prudently or comply with Securities and Futures Act requirements due to the influence of a substantial shareholder or effective controller.

On the tax front, MAS introduced new tiers under the Financial Sector Incentive-Fund Manager (FSI-FM) scheme in 2025, offering concessionary tax rates of 0% and 5% for newly listed fund managers and fund managers that invest in Singapore-listed equities, supplementing the existing 10% and 15% rates. This was accompanied by structural flexibility: registered fund management companies (RFMCs) can now transition to operate as holders of a capital markets services licence for fund management serving qualified investors (A/I LFMCs), removing the previous 30-investor cap while retaining the S$250 million AUM limit, subject to MAS review if they plan to exceed that threshold.

Private Equity Resilience Within Segmented Market

While overall fund management was subdued, private equity activity in Singapore demonstrated relative resilience compared to the broader Southeast Asian region. According to Ashurst's 2025 overview of fund finance regulations, Singapore secured US$3.7 billion of the total US$9 billion in Southeast Asian private equity investments in the nine months ending September 2024. Firms headquartered in Singapore raised US$4.05 billion across 369 deals in that period, down slightly from US$4.3 billion and 410 deals in the same period of 2023.

Private equity deals in Singapore and Indonesia continued to attract the bulk of investment capital for the region, accounting for over 80% of Southeast Asia's deal value and deal count. In terms of sector focus, healthcare, real estate, hospitality, and infrastructure—particularly those in the energy transition space—continued to attract investor interest. The resilience of Singapore's investment industry has remained a consistent theme, supported by access to pan-ASEAN opportunities and a stable regulatory environment.

Looking ahead, the MAS expects the finance and insurance sector to remain supported by broadly accommodative macroeconomic and financial conditions in 2026. A low-interest-rate environment could provide some tailwind for fund management activity, potentially supporting a modest recovery from 2025's subdued performance. However, persistent geopolitical tensions, the ongoing liquidity risk review, and the IMF's caution on the risk of rapid tightening in financial conditions will keep the segment operating cautiously. Investment funds should continue to monitor liquidity risks, as the MAS Financial Stability Review emphasized, while insurers remain vigilant on capital and liquidity positions amid continuing market volatilities.