“Buying the dip” in Singapore rarely involves falling knives given its resilience. And now, SMIDs and ETFs are generating new momentum.

By Samuel Wong, Senior Trading Strategist, OCBC

All traders know that headlines can trigger huge market reactions. Take the recent Greenland episode: US President Donald Trump’s threat of tariffs on European nations sent the S&P 500 down 1 to 1.5% overnight, pulling most Asian markets lower.

Many expected Singapore’s Straits Times Index (STI) to follow suit with a 3 to 5% drop, presenting a prime buying opportunity. Instead, from 12 to 20 January 2026, the STI rose 2.2%.

This reflects what I’ve long believed: Singapore’s market behaves differently to others. Known for steady dividends and strong fundamentals, it remains shock-proof even at multi-year highs.

While a mild pullback would be healthy after recent gains, valuations are reasonable, governance is tight, and balance sheets remain robust. This is why I often say that in Singapore, buying a dip – if it comes – is not “catching a falling knife” in a free-fall.

What’s making it even more intriguing is that new growth drivers are emerging. Most visible of these is the S$5 billion Equity Market Development Programme (EQDP), launched last year and designed to revive research coverage and deepen liquidity, especially in small‑ and mid‑cap stocks (SMIDs).

Then came the debut of the SGN50 Index in September 2025 which sent the signal that Singapore is ready for a more growth‑tilted stance. Conversations are also underway on a potential SGX–Nasdaq dual‑listing bridge, hinting at further expansion.

All this points to a market gaining fresh momentum without sacrificing what made it so steady in the first place.

Hidden gems, not penny stocks

For years, the market was dominated by large caps offering steady dividends. That hasn’t changed but it did mean that many smaller companies with solid fundamentals received less attention. Those could be cash-rich, exposed to structural themes like technology and AI, or had credible turnaround stories with candidates that moved from stressed balance sheets to sustainable profitability. The EQDP’s focus on SMIDs is set to showcase these hidden gems.

This is not a return to the penny-stock excesses of the early 2000s. Today, governance is tighter, reporting standards are higher, and problematic listings have been weeded out over the years.

While the SMID cohort is smaller, today’s SMIDs are cash‑generative, conservatively managed, and often tied to real‑economy assets. All these are qualities that prevent the sharp collapses seen in speculative markets.

To get a sense of what Singapore’s SMID landscape looks like, we can refer to the SGX Next 50 Index as a benchmark. Real estate and Industrials – sectors that are grounded by real assets – have a heavy weightage of 55.4% of the index. They are structurally less prone to runaway rallies or painful crashes, reinforcing the idea that when corrections happen, they tend not to be crashes.

With EQDP‑funded research and improved trade execution, price discovery should also become sharper. Quality SMIDs are more likely to re‑rate upward rather than collapse downward – meaning that “buying the dip” in Singapore rarely involves falling knives.

ETFs also likely to lead inflows

ETFs also play into providing momentum while contributing to stability. They offer instant, diversified access to the market’s core at transparent costs and with institutional‑grade liquidity.

Consider the perspective of an overseas investor with foreign cash to deploy. The natural first question is: Why pay attention to Singapore? Realistically, they wouldn’t begin by stock‑picking unfamiliar names. They start with broad, efficient exposure and that is precisely where ETFs come in.

Momentum on this front is already underway. SGX-listed ETFs had a bumper year in 2025, with S$2.4 billion in net inflows. Moreover, according to the latest data from SGX, the Securities Daily Average Value (SDAV) for 2025 gained 21% to almost S$1.5 billion, the highest since 2010. Such strong numbers could not be driven by retail investors along. Instead, they suggest stronger institutional participation and growing ETF turnover on the exchange. Such programmatic, institution‑driven flows act as a natural stabiliser for the market during periods of volatility, helping to moderate downside.

ETFs also spread ownership across sectors and caps. This helps prevent any single event from triggering broad‑based sell‑offs – one more reason Singapore “dips” tend to be shallow.

A final stabiliser lies in Singapore’s currency. The Singapore dollar, managed under MAS’s exchange‑rate‑based regime, has a track record of holding its value even amid global FX swings. A stable currency leads to steadier, stickier foreign inflows, supporting consistent participation and a smoother market trajectory instead of cliff‑drop corrections.

The tortoise that keeps gaining ground

I love to talk about the Singapore market in terms of the old parable of the tortoise and the hare. Today, the tortoise is just as disciplined, but is picking up speed.

It is unlikely to be a ‘hare’ – a high‑flying, sentiment‑driven market like the US. Nor does it need to be. Instead, it is showing that resilience and momentum coexist.

For those revisiting Singapore, a practical roadmap might look like this: Core exposure via a Singapore equity ETF. Then, layering in quality large caps that anchor income and which provide defensiveness. SMIDs then provide further exposure (look for active funds or well-researched names aligned to structural themes, and those with credible turnaround trajectories). Then, let the market’s income engine compound.

In Singapore, dips don’t turn into plunges – they turn into opportunities.

This article was first published in The Business Times on 31 January 2026.