DBS Group Research has released a report indicating that Singapore’s stock market is set to benefit from diversified fund inflows, maintaining a year-end target for the Straits Times Index (STI) at 4,430. The report highlights Singapore’s appeal as a safe haven due to its low US reciprocal tariff rate, skilled workforce, supportive policies, and political stability. These factors, alongside a 3.27% yield spread between the STI and the Monetary Authority of Singapore’s 10-year yield, are expected to support equities despite a forecasted earnings dip.
The report notes that small to mid-cap stocks are likely to outperform the STI, driven by the Equity Market Development Programme (EQDP) and enhancements to the GEMS scheme. “Yangzijiang and UMS Integration are stocks that should buck the trend of negative headline EPS decline within the industrials and info tech sectors,” the report states.
DBS suggests positioning for external fund inflows, EQDP, and REITs, with large-cap stocks such as Singtel and Yangzijiang being key beneficiaries. The report also identifies potential beneficiaries among small-mid caps, including UMS Integration and ComfortDelGro.
The report underscores the importance of Singapore’s market amidst macro uncertainties, with September traditionally being a weak month for the US stock market. It also anticipates developments in the EQDP, with Fullerton Fund Management set to launch its Singapore Value-Up fund in Q4 2025, focusing on local small-mid caps.
“`
