Singapore’s equity market is on track to reach its highest levels in six years, driven by a resurgence in bank stocks and growing optimism ahead of the upcoming earnings season. The Straits Times Index rose by up to 0.7% on Wednesday, approaching its peak since June 2018. Leading the gains were Mapletree Pan Asia Commercial Trust and DBS Group Holdings Ltd., among others.
In recent weeks, banks have emerged as top performers in Singapore’s market, with shares reaching record highs fueled by robust dividend expectations. The anticipated strong earnings from banks are bolstered by higher interest rates.
DBS, Oversea-Chinese Banking Corp., and United Overseas Bank Ltd. are slated to announce their second-quarter results in early August.
“Bank stocks are poised to drive further market gains in the short term, supported by strong fundamentals such as return on equity and dividends,” said John Foo, founder of Valverde Investment Partners Pte.
However, the outlook for banks could face headwinds once the Federal Reserve initiates easing measures. Federal Reserve Chairman Jerome Powell has refrained from specifying a timeline for interest-rate cuts, although investor sentiment increasingly anticipates action starting in September.
“The STI offers some of the most attractive dividend yields in Asia,” noted Nirgunan Tiruchelvam, an analyst at Aletheia Capital. “Amid falling rates, the STI stands out as an appealing option, especially given the consistent income provided by companies including Real Estate Investment Trusts and firms linked to Temasek Holdings Pte.”
This bullish sentiment underscores Singapore’s resilience in the face of global economic uncertainties, positioning its equities as a favored destination for income-seeking investors.
