- SGX-listed ETFs and Singapore focused ETFs recorded strong fund flows, reflecting rising institutional interest, while SGX’s plan to reduce minimum lot sizes is expected to further boost retail participation.
- 2025 saw the highest number of new listings on SGX in the past decade, with future activity supported by a streamlined listing process and the upcoming SGX-Nasdaq dual listing bridge.
- Small and mid-caps are moving to the forefront of investor attention, supported by the newly launched index and expected growth in funds and ETFs tracking this segment, offering attractive investment opportunities.
- STI earnings are set to strengthen, underpinned by resilient bank earnings and a low-interest-rate environment supporting REITs.
- Structural tailwinds support the broader Singapore market, with improved investor interest and confidence driving a revision of the STI’s fair P/E multiple from 14x to 15x.
- We maintain our 4.0-star “Very Attractive” rating for Singapore equities and project a target price of 5,275 by end 2027, implying an upside potential of 16.6% from the 28 November 2025 share price.
The Straits Times Index (STI) has extended its record-breaking rally into the second half of 2025, in line with our expectations. Since our last update on 5 August, the index has climbed from 4,208.58 to 4,523.96 as of 28 November, delivering a robust 7.5% gain. This brings the STI’s price return for the first eleven months of 2025 to 19.4%, exceeding the 15.4% recorded over the same period in 2024 and highlighting both the market’s resilient fundamentals and the rising investor interest in Singapore equities.
Figure 1: STI price increased year-to-date
Rising institutional and retail interest
Equity market initiatives have strengthened Singapore’s market performance and set a positive tone for 2026. A series of measures introduced in 2025 to enhance the competitiveness of the equity market has led to a marked improvement across multiple dimensions.
Table 1: Major equity market initiatives and latest developments
| Initiative | Aim | Size | Latest Development |
| Equity Market Development Programme (EQDP) | Strengthen Singapore’s asset management and research ecosystem to boost investor interest in local equities. | SGD 5 billion | MAS appoints the second batch of EQDP asset managers, with SGD 2.85 billion in placements. |
| Value Unlock Package | Deepen investor engagement and sharpen companies’ focus on shareholder value creation. | SGD 30 million | MAS launches two grants to build competencies in corporate strategy, capital optimisation, and investor relations. |
| Enhanced Grant for Equity Market Singapore (GEMS) Scheme | Enhance the equity research ecosystem to support growth in Singapore’s listed product suite. | SGD 50 million | Increased research activity, with more non STI stocks receiving coverage; reports are available on the SGX website. |
| SGX-Nasdaq dual-listing bridge | Attract quality Asia-based growth companies (≥ SGD 2 billion market cap) with global ambitions to raise capital in Singapore. | N.A. | Relevant regulatory processes are underway for the new Board, which is expected to launch around mid-2026. |
| Source: Monetary Authority of Singapore Data as of 20 Nov 2025 |
|||
SGX-listed ETFs have attracted strong fund flows in 2025, recording SGD 1.4 billion in net inflows year-to-date. By end September, the Singapore ETF market reached a record SGD 16.3 billion in AUM, representing a 40% YoY increase. Trading activity also picked up, with ETF daily turnover rising 68% YoY in 3Q25; September alone saw the highest monthly turnover in five years, surpassing levels last seen in March 2020.
Supported by easing domestic interest rates and sustained market momentum, Singapore-focused ETFs recorded an inflow of SGD 788 million in 3Q25. Overall ETF fund flows to Singapore securities in 2025 have reached their highest level since 2021, reflecting growing investor confidence. On the retail front, SGX’s plan to reduce the board lot size for securities priced above SGD 10 from 100 units to 10 units will significantly lower minimum investment requirements, making a broader range of equities, including blue chips, more accessible and affordable to retail investors.
Figure 2: 2025 ETF fund flows to Singapore securities demonstrate strong growth
Uptick in new listings supports market activity
New listing activity is gaining strong momentum, with SGX recording 36 new listings in 2025, the highest in a decade, and more than 30 companies reported to be in the IPO pipeline as of mid-2025.
Figure 3: 2025 number of new listings exceed any of the past 10 years
This trajectory is being reinforced by ongoing reforms to streamline the listing process. Singapore is consolidating prospectus and listing suitability reviews under SGX RegCo, allowing prospective issuers to deal with a single regulator instead of both MAS and the exchange. In addition, the Mainboard profit-test threshold has been reduced from SGD 30 million to SGD 10 million, bringing SGX in line with major global exchanges and broadening access for quality issuers.
Further support is expected from the upcoming SGX-Nasdaq dual-listing bridge, targeted to launch by mid-2026. This initiative will enable high-growth Asian companies with global ambitions, and market capitalisations of at least SGD 2 billion to list on both exchanges using a single set of offering documents and a simplified review process. By cutting duplicative regulatory requirements and opening access to deeper capital pools in both Singapore and the US, the bridge is poised to attract more regional growth companies and strengthen SGX’s pipeline of new listings in future.
Small and mid-caps offer compelling potential
Singapore’s small and mid-cap (SMID) segment remains a key pillar of market depth and an increasingly important source of investment opportunity. Companies valued between SGD 100 million and SGD 10 billion account for roughly 30% of total market capitalisation and a similar share of trading activity this year. Investor appetite has strengthened meaningfully in the second half of 2025: SMIDs recorded SGD 472 million in net institutional inflows up to 30 October, and excluding S-REITs, net institutional inflows across other SMID sectors rose to nearly SGD 890 million, reversing the SGD 150 million outflow in the first half. Performance has also broadened, with mid-cap stocks outperforming the STI since mid-year, highlighting the strong return potential within the wider Singapore market.
Figure 4: Small and mid-cap stocks have outperformed large caps in recent months
STI earnings are set to strengthen
Earnings recovery across STI constituents is set to provide a solid foundation for 2026. Of the 30 companies in the index, 26 are projected to deliver positive EPS growth. This broad-based improvement points to a clear upward trajectory for aggregate index earnings, reinforcing the fundamental strength underpinning the STI.
Table 2: Consensus estimates indicate STI earnings recovery
The financial sector outlook remains constructive despite net interest margin compression. Singapore’s banks recorded 8.7% YoY deposit growth in the first eight months of 2025, accelerating from 4.9% during the same period in 2024. Deposit expansion remains a key earnings driver. According to Goldman’s report, every one percentage point increase in deposits could lift operating income by 0.6–0.7% when directed into wealth and AUM-related activities. Combined with higher fee income, these trends help offset softer net interest income amid lower rates, supporting overall profitability.
S-REITs are also regaining momentum following a strong 3Q25 performance. Consensus expects 5.7% earnings growth in 2026 for the iEdge S-REIT Index after an estimated 19% decline in 2025. Fundamentals remain solid, underpinned by high occupancy rates and positive rental reversions, while valuations remain attractive at 0.95x P/B, slightly below the 10-year average of 1.0x. Anticipated rate cuts by major central banks are likely to provide further tailwinds by lowering financing costs. S-REITs are well positioned to attract income-seeking investors rotating from fixed deposits and short-term instruments, with the iEdge S-REIT Index offering a dividend yield above 5%.
Investment risks
The main risk for 2026 stems from slower economic growth. Singapore’s GDP is projected to moderate to 1.0%–3.0%, down from the upgraded 4.0% forecast for 2025, as activity normalises across trade related sectors. Global demand is expected to soften, and both manufacturing and trade related services are likely to expand at a slower pace than in 2025. Semiconductor equipment makers within the precision engineering cluster may also adopt a more cautious stance amid lingering uncertainty over US tariff policies. Despite these headwinds, Singapore’s economy remains resilient, supported by relatively firm Purchasing Managers’ Index (PMI) readings—an economic indicator that measures trends in the manufacturing and services sectors based on monthly surveys of purchasing managers. Contained inflation provides authorities with additional policy flexibility should further support be required.
Attractive valuations and upside potential
Figure 5: 10-year average forward P/E ratio for the STI
At the same time, the STI’s dividend yield of around 5% remains compelling, outperforming most major global and regional markets and offering an attractive income opportunity in a low-interest-rate environment.
Table 3: STI offers the highest dividend yield among major global and regional markets
|
Index |
Forecasted Dividend Yield (%) |
||
|
2025 |
2026 |
2027 |
|
|
STI |
4.7 |
4.9 |
5.1 |
|
FTSE Hong Kong Index |
3.6 |
3.8 |
4.0 |
|
MSCI World High Dividend Yield Index |
3.3 |
3.5 |
3.8 |
|
MSCI Asia ex Japan Index |
2.1 |
2.3 |
2.5 |
|
Nikkei 225 |
1.5 |
1.7 |
1.9 |
|
KOSPI |
1.5 |
1.7 |
1.8 |
|
S&P 500 |
1.2 |
1.3 |
1.4 |
|
Source:
Bloomberg Finance L.P., iFAST Compilations |
|||
Based on 15x fair P/E multiple, we project a target price of 5,275 by end 2027, implying an upside potential of 16.6% from the share price on 28 November 2025. Accordingly, we maintain our 4.0-star “Very Attractive” rating on the Singapore market, supported by its wide-ranging return potential amid the ongoing policy-driven equity market revitalisation. We recommend that investors consider capturing this opportunity through the Amova Singapore Dividend Equity SGD Fund and the Amova Singapore STI ETF (SGX: G3B). For investors seeking broader exposure beyond the STI, the LionGlobal Singapore Trust Acc SGD offers a compelling alternative.
Table 4: The STI index’s valuation table
|
STI |
2024 |
2025E |
2026E |
2027E |
|
PE Ratio (X) |
11.6 |
14.8 |
13.9 |
13.0 |
|
Earnings growth (YoY%) |
7.3% |
-6.2% |
6.8% |
7.2% |
|
Projected Earnings Per Share (EPS) |
327.6 |
307.4 |
328.2 |
351.7 |
|
Target Price (Based on 15X fair P/E Ratio) |
5,275 |
|||
|
Upside Potential (%) |
16.6% |
|||
|
Source:
Bloomberg Finance L.P., iFAST Estimates |
||||
Figure 6: STI Price vs EPS
Declaration:
For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.
All materials and contents found in this site are strictly for general circulation and informational purposes only and should not be considered as an offer, or solicitation, to deal in any of the funds or products found/identified in this site. While iFAST Financial Pte Ltd ("IFPL") has tried to provide accurate and timely information, there may be inadvertent delays, omissions, technical or factual inaccuracies and typographical errors. Any opinion or estimate contained in this report is made on a general basis and neither IFPL nor any of its servants or agents have given any consideration to nor have they or any of them made any investigation of the investment objective, financial situation or particular need of any user or reader, any specific person or group of persons. You should consider carefully if the products you are going to purchase are suitable for your investment objective, investment experience, risk tolerance and other personal circumstances. If you are uncertain about the suitability of the investment product, please seek advice from a financial adviser, before making a decision to purchase the investment product. Past performance is not indicative of future performance. The value of the investment products and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice. In respect of any matters arising from, or in connection with the said research analyses or research reports, recipients of the report are to contact IFPL at 10 Collyer Quay, #26-01 Ocean Financial Centre Building, Singapore 049315, or by telephone at +65 6557 2853. Where the report contains research analyses or research reports from a foreign research house and if the recipient of such research analyses or research reports is not an accredited investor, expert investor, institutional investor or an ex-accredited investor, IFPL accepts legal responsibility for the contents of such analyses or reports to such persons only to the extent as required by law. Please note that only certain security(ies) herein are available to all investors, while the rest are only available for certain persons to invest in, such as Accredited Investors (as defined in the Securities and Futures Act) or one who invests at least S$200,000 (or its equivalent currency) per transaction. To qualify as an Accredited Investor, one needs to submit a declaration form and certain relevant supporting documents, according to iFAST’s prevailing policies and procedures.
Please read our full disclaimers on the website at ( https://secure.fundsupermart.com/fsmone/policies/328125/investment-account-terms-&-conditions).
iFAST Financial Pte Ltd (IFPL) (registered address: 10 Collyer Quay #26-01 Ocean Financial Centre Singapore 049315, Telephone: 6557 2000) holds the Financial Advisers Licence issued by the Monetary Authority of Singapore ('MAS') to conduct regulated activities of advising on securities, marketing of collective investment schemes and arranging of any contract of insurance in respect of life policies, other than a contract of reinsurance and the Capital Markets Services Licence issued by the MAS to conduct regulated activities of dealing in securities and providing custodial services for securities. While IFPL has made every effort to ensure the independence of the report's contents, IFPL's nature of business is such that IFPL and its connected and associated entities together with their respective directors, officers and staff may be involved in providing dealing or investment-related services in the abovementioned securities, and have taken or may take positions in the securities mentioned in this report, and may also act as the principal for any buy or sell trades.