<\/p>\nRepublic\u2019s gross domestic product growth is expected to slow to 0 per cent to 2 per cent<\/p>\n
<\/a> from 4.4 per cent in 2024. <\/p>\n
The STI\u2019s gain past 4,200 has sparked a debate over whether the rally is supported by fundamentals, or whether investors should brace themselves for disappointment if global shocks arrive.<\/p>\n
One of the most influential investment banks, Goldman Sachs, downgraded Singapore to \u201cmarket weight\u201d in June, following the STI\u2019s strong year-to-date performance driven by technology, defence and renewables stocks. <\/p>\n
Valuations are becoming expensive and with earnings growth projected at just 5 per cent for 2025 and 2026, the potential for further outperformance appears limited, the Wall Street bank said. It added that it would be wise for investors to secure profits.<\/p>\n
Lower interest rates may pressure the net interest margins of the three local banks \u2013 DBS, UOB and OCBC \u2013 but lower borrowing costs can benefit the property market and real estate investment trusts (Reits), leading to a balanced fundamental outlook, it said.<\/p>\n
On the other hand, analysts in the bull camp are banking on Singapore\u2019s defensive market with strong dividend yields, governance and accommodative policy stance to soften global headwinds.<\/p>\n
JP Morgan\u2019s team believes the country has enough fiscal room to boost the economy if risks emerge. It prefers Singapore-focused Reits over those focused on overseas assets or exposed to global trade, which face greater risks from currency movements, vacancies and variable regulations that can impact returns.<\/p>\n
Fuelling the bullish sentiment are the Government\u2019s market reforms, including a $5 billion programme to boost SGX-listed stocks which bulls see as a rare window for investors to adjust portfolios and seize new trading opportunities.<\/p>\n
The Equity Market Development Programme (EQDP) is the most ambitious intervention in decades to revive Singapore\u2019s ailing equity market.\u00a0<\/p>\n
Announced in February by the Monetary Authority of Singapore and the Financial Sector Development Fund, it aims to strengthen local asset management and research, and raise investor interest in the local equities market.<\/p>\n
The EQDP and a suite of tax and regulatory incentives have already ignited institutional investors\u2019 interest and initial inflows are likely to benefit liquid large market value companies, according to Morgan Stanley.<\/p>\n
On July 21, $1.1 billion was allocated to the first three asset managers under the EQDP. They are Avanda Investment Management, Fullerton Fund Management and JP Morgan Asset Management. <\/p>\n
Interest in the programme has been strong, given that more than 100 asset managers submitted proposals.<\/p>\n
More asset managers will be appointed to manage the remaining funds under the EQDP. <\/p>\n
Beyond the large blue-chip stocks, analysts expect interest to spill over onto certain small and mid-capitalised stocks, which have lagged behind their bigger counterparts by more than 30 per cent in the last two years, JP Morgan experts said.\u00a0\u00a0<\/p>\n
But they warn significant outperformance by the smaller companies versus the larger ones is unlikely due to \u201chigher multiples and uncertain profitability, lower liquidity and growth of the group\u201d.<\/p>\n
JP Morgan expects stocks with good track records of earnings growth and quality balance sheets to attract additional fund flows.\u00a0 <\/p>\n
CapitaLand Integrated Commercial Trust, CapitaLand Ascendas Reit and Keppel DC Reit are among its top picks. <\/p>\n
Morgan Stanley\u2019s Singapore research team led by Mr Nick Lord sees the return on equity (ROE) \u2013 a measure of how well companies convert shareholders\u2019 investments into earnings \u2013 rising and a potential doubling of the stock market value here by 2030.<\/p>\n
This wealth creation hinges on three key pillars \u2013 developing the Republic\u2019s hub status, driving early adoption of new technologies and reforming the equity market.\u00a0<\/p>\n
\u201cSingapore is far more than a safe haven,\u201d the team noted.\u00a0<\/p>\n
Strong productivity gains from the country\u2019s position in key hub industries and rapid technology adoption as well as efforts to improve shareholder returns will boost ROE further, it added.<\/p>\n
All the three Singaporean banks have been growing wealth management businesses, which will continue to lift profits.\u00a0<\/p>\n
Conglomerates like CapitaLand Investment and Keppel have been migrating towards asset management from asset ownership. Other companies have increased their dividend payouts and bought back their shares.<\/p>\n
DBS Bank\u2019s chief investment officer Hou Wey Fook expects Singapore equities to continue to outperform, underpinned by resilient high yields and the EQDP. <\/p>\n
Large-capitalised blue chips are set to be prime beneficiaries. These include global leaders in aviation and engineering, and household names across retail, telecommunications and healthcare.\u00a0<\/p>\n
With enhanced liquidity and the promise of new investor inflows, these companies offer the dual allure of resilient profitability and deep market depth, Mr Hou said.\u00a0<\/p>\n
On the sector front, earnings drivers are stacking up. Singapore banks are enjoying a rebound in fee income as markets stabilise, Reits are seeing some relief from lower financing costs, property developers are finding ways to unlock underlying value, and the engineering sector is riding higher on increased aerospace and defence spending.\u00a0<\/p>\n
Not to be overlooked \u2013 the upcoming SG60 national celebrations, along with the vouchers, are expected to spur consumer sentiment, fuelling a retail spending bump.<\/p>\n
The market here is also a yield haven in a low interest rate environment.<\/p>\n
Mr Hou noted that Singapore equities boast an average dividend yield of 4.5 per cent \u2013 a standout in the region and all the more compelling with 10-year Singapore government bonds yielding just 2.2 per cent.\u00a0<\/p>\n
This should attract income-focused investors, especially those seeking capital preservation in an uncertain world.\u00a0<\/p>\n
\u201cIt is particularly attractive now considering the backdrop of a weak US dollar and strong Singapore dollar. Stable and sustainable dividend income can provide a cushion for total returns during periods of crisis,\u201d Mr Hou said.<\/p>\n
Of course, headwinds remain. Export-oriented companies, particularly those with limited pricing power \u2013 such as ports, airline cargo and certain manufacturing exporters \u2013 are vulnerable to the evolving tariff backdrop.\u00a0<\/p>\n
Rates, transshipment rules and sector-specific curbs, especially in pharmaceuticals, pose ongoing risks.<\/p>\n
Yet, the shifting global order is also sowing the seeds for new opportunities. As supply chains reconfigure and companies reassess regional footprints, Singapore\u2019s reputation for stability, transparency and policy ingenuity positions it as a leading beneficiary of this emerging economic landscape, Mr Hou added.<\/p>\n
The Singapore Exchange (SGX) is a clear beneficiary if the equities ecosystem is rejuvenated.\u00a0<\/p>\n
Ms Carmen Lee, head of OCBC Investment Research, is optimistic that SGX could see more initial public offerings (IPOs) as it rolls out reforms to attract more listings.<\/p>\n
Ms Audrey Goh, head of asset allocation at Standard Chartered Bank\u2019s wealth solutions division, expects the EQDP to enhance liquidity and broaden investor participation beyond the top 30 companies comprising the STI \u2013 notably the small and mid-cap firms with strong records of earnings growth and profitability.<\/p>\n
With interest rates peaking and a decline in the Singapore Overnight Rate Average, Singapore equities, particularly in yield-sensitive sectors, stand to benefit further, she added.<\/p>\n
Macquarie, an Australian investment bank, has identified a basket of small-mid caps that will benefit from institutional interest under the EQDP.<\/p>\n
Its top picks for small-cap Singapore stocks that may benefit from the new mandates are ComfortDelGro, First Resources, iFast, Parkway Life Reit and StarHub.<\/p>\n
ComfortDelGro, a diversified transportation provider with Singapore taxi and public transport operations as well as international bus and rail ones, could reap maiden contributions in 2025 from its acquisitions.<\/p>\n
With a dividend yield of 6 per cent to 7 per cent, the stock is attractive relative to its valuation and earnings growth.\u00a0<\/p>\n
First Resources is an Indonesian palm oil producer, and \u201cthe cheapest planter\u201d in Macquarie\u2019s coverage. With earnings projected to grow 25 per cent in 2025 over the previous year, it offers the highest earnings growth potential compared with the sector\u2019s average at 4 per cent.<\/p>\n
iFast is a global digital banking and wealth management platform, which Macquarie rates as an \u201coutperformer\u201d with a price target of $8.70 a share. The stock is trading below $8.<\/p>\n
The research team calls it \u201ca rare high-growth name on the Singapore market\u201d, underpinned by its dominant position in the business-to-business wealth platform space, as well as fintech operations in digital banking and e-pension administration.<\/p>\n
Parkway Life Reit, which manages healthcare and senior living properties, is favoured for its \u201cimpeccable track record of steady growth\u201d since IPO without the need to raise funds. It has limited downside risk with the interest rate and foreign exchange hedged until 2029.<\/p>\n
The research team expects a big jump in the Reit\u2019s Singapore rental growth in 2026 once upgrading works at Mount Elizabeth Hospital in Orchard are completed. Potential growth is seen in the Reit\u2019s maiden acquisition of 11 nursing homes in France.\u00a0<\/p>\n
StarHub could grab more consumer mobile market share in 2025, and boost its service revenue, Macquarie said. The telco is on a lookout for mergers and acquisitions, which will position it well during a consolidation.<\/p>\n
Among the large-cap stocks, Macquarie\u2019s top picks are OCBC, Sembcorp Industries, ST Engineering, CapitaLand Ascendas Reit, DFI Retail and Keppel DC Reit, which was included in the STI in June.<\/p>\n
Local brokerage and research house UOB KayHian\u2019s list of potential beneficiaries includes Centurion, which owns, develops and manages worker and student accommodations; NetLink Trust, which operates the passive fibre network infrastructure of Singapore\u2019s Nationwide Broadband Network; Raffles Medical; supermarket operator Sheng Siong; Jardine Cycle & Carriage; Olam; CapitaLand India Trust; Keppel Infrastructure Trust and SIA Engineering.\u00a0<\/p>\n
Maybank Securities\u2019 research head Thilan Wickramasinghe believes small and mid-cap companies with stronger corporate governance credentials are likely to attract more investments.\u00a0<\/p>\n
Couple this with trading liquidity, growth and balance sheet strength, 18 companies stood out for Maybank Securities: AEM Holdings, Nanofilm Technologies, Centurion, UMS Integration, CSE Global, Frencken Group, ComfortDelGro, First Resources, SingPost, Golden Agri-Resources, Sheng Siong, Sats, iFast, Yangzijiang Financial, SIA Engineering, Food Empire, StarHub and Riverstone Holdings.<\/p>\n
While the Government\u2019s reforms are ambitious, it bears to keep in mind that the liquidity gaps in the small and mid-cap segment will not close overnight. Global funds may be slow to increase Singapore allocations given persistent worldwide uncertainty and limited index weightings.<\/p>\n
The effectiveness of tax incentives and regulatory changes will depend on sustained execution and market buy-in.<\/p>\n","protected":false},"excerpt":{"rendered":"SINGAPORE \u2013 Singapore\u2019s stock market enters the second half of 2025 on the back of a surprisingly robust…\n","protected":false},"author":2,"featured_media":39601,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[37],"tags":[28,112],"class_list":{"0":"post-39600","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-business","9":"tag-markets"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/39600","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=39600"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/39600\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/39601"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=39600"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=39600"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=39600"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}