To The Moon

Why Singapore STI Rallied for 8 Consecutive Weeks

1. Global Liquidity & Fed Rate Cut Bets

• Markets price rate cuts starting 2027, driving capital from expensive US tech into Asia’s high-dividend defensive assets.

• Singapore’s 4%–6% stock dividend yield and S-REIT 5%–8% payout attract global pension funds and family offices.

• Geopolitical tensions push safe-haven inflows to Singapore’s AAA-rated market.

2. Structural Policy Tailwinds (Key Driver)

• MAS expanded the SGD6.5b Equity Market Development Programme (EQDP), deploying nearly SGD4b to buy blue chips, mid-caps and REITs.

• $SGX(S68.SI)$ trading reforms cut minimum lot sizes, boosting retail turnover by 52% YoY.

• Dual-listing framework with $NASDAQ(.IXIC)$ and corporate value-unlocking schemes lift long-term valuation.

3. Resilient Domestic Economy & Earnings

• Q1 2026 GDP surged 6.0% YoY, powered by AI semiconductor exports, data center construction and wealth management services.

• Listed firms forecast 8.5% profit growth in 2026. Local banks hit record loan volumes with stable net interest margins.

• Persistent current account surpluses underpin SGD stability.

4. Index Composition: Banks Dominate Gains

• Three local banks ( $DBS(D05.SI)$ , $OCBC Bank(O39.SI)$ , $UOB(U11.SI)$ ) make up ~50% of STI weight.

• Their consistent 1.5%–2.3% weekly rallies anchor the index, while S-REITs benefit from lower future borrowing costs amid rate-cut expectations.

5. Sustained Dual Capital Inflows

• Overseas sovereign wealth funds and family offices allocate to Singapore equities;

• local retail investors shift savings and speculative capital to stocks.

• EQDP’s phased capital injection provides consistent long-term buying support.

6. Reasonable Valuations Leave Upside Room

• STI P/B remains around historical average, cheaper than most regional peers.

• Investment banks lift year-end STI target to 6,500 points, supporting further re-rating.