| In the midst of global economic uncertainties, Singapore's equity market is emerging as a beacon of stability. According to a DBS Group Research report dated Sept 3, the Straits Times Index is on track to hit a year-end target of 4,430, with small- and mid-cap stocks poised to outperform large caps. What’s fueling this optimism?
These inflows are underpinned by Singapore's safe-haven status—featuring low US reciprocal tariffs (10%), a skilled workforce, supportive policies, and political stability—amid rising risks in neighbors like Indonesia and Thailand. Let’s dive into these 3 sources and the 4 groups of stocks set to benefit. |
First, passive funds from the US and EU are channeling significant capital into large-cap stocks, say DBS analysts Yeo Kee Yan and Foo Fang Boon.
As of end-July 2025, Singapore stocks have seen a cumulative inflow of USD1.1 billion from US, EU, and local passive and active funds, more than offsetting outflows.
|
Fund Source |
Description |
Beneficiary Stocks |
|
Passive Funds |
Driven by Singapore's safe-haven status, attractive dividend yield (c. 4.5%), P/B valuation, and fading US exceptionalism narrative. |
● Singtel |
|
Stock Name |
Price |
Target Price |
|
Singtel |
4.38 SGD |
5.04 SGD |
|
Yangzijiang Shipbuilding (Holdings) Ltd |
2.88 SGD |
3.80 SGD |
|
DFI Retail Group Holdings Ltd |
3.17 USD |
3.90 USD |
Second, the Equity Market Development Programme (EQDP) is injecting vitality into small- and mid-cap (SMC) stocks.
Launched by the Monetary Authority of Singapore (MAS), the EQDP provides SGD5 billion in seed funding to asset managers, who must attract additional capital.
The first batch of managers, including Fullerton Fund Management, is gearing up for launches by year-end.
This initiative, combined with enhancements to the Grant for Equity Market Singapore (GEMS) scheme, is boosting SMC visibility through research and liquidity.
|
Fund Source |
Description |
Beneficiary Stocks |
|
Equity Market Development Programme (EQDP) |
MAS initiative with $5bn seed funding to boost small-mid caps. |
● UMS Integration |
|
Stock Name |
Price |
Target Price |
|
UMS Integration |
1.51 SGD |
1.84 SGD |
|
SIA Engineering |
3.25 SGD |
3.50 SGD |
|
ComfortDelGro |
1.44 SGD |
1.80 SGD |
|
GuocoLand |
1.88 SGD |
2.00 SGD |
|
Nam Cheong |
0.625 SGD |
N/A |
|
Singapore Land |
3.19 SGD |
N/A |
|
Hotel Properties |
4.46 SGD |
N/A |
Third, falling domestic interest rates is driving funds from money markets and fixed deposits into high-yield income stocks.
|
Fund Source |
Description |
Beneficiary Stocks |
|
Falling Domestic Interest Rates |
Shifts flows from money markets (e.g., MAS T-bills, fixed deposits) into income/dividend stocks amid >200bps yield drop. |
● Large-cap REITs: Mapletree Logistics Trust, Mapletree Pan Asia Commercial Trust, CapitaLand Integrated Commercial Trust, Frasers Centrepoint Trust |
We can split beneficiaries into two groups for clarity: large-cap REITs and SMC REITs.
|
Stock Name |
Price |
Target Price |
|
Mapletree Logistics Trust |
1.17 SGD |
1.55 SGD |
|
Mapletree Pan Asia Commercial Trust |
1.36 SGD |
1.50 SGD |
|
CapitaLand Integrated Commercial Trust |
2.21 SGD |
2.30 SGD |
|
Frasers Centrepoint Trust |
2.36 SGD |
2.75 SGD |
|
Stock Name |
Price |
Target Price |
|
Suntec REIT |
1.32 SGD |
1.40 SGD |
|
LendLease Global Commercial REIT |
0.575 SGD |
0.75 SGD |
|
ESR REIT |
0.25 SGD |
3.20 SGD |
|
Elite UK REIT |
0.355 GBP |
0.40 GBP |
In summary, these inflows—passive funds, EQDP, and rate-driven shifts—position Singapore equities for resilience amid US seasonal weakness and global tariffs.
Stocks with little to no prior coverage would likely benefit most from expanded research, as exemplified by the sharp rise in securities daily average value (SDAV) traded following its Equity Explorer (EE) publications, says DBS Research. DBS identified nine such less-covered stocks with prevalent thematic exposure in the SMC space:
*Note: Non-rated Equity Explorers |
The full 13-page DBS report is here.
