Singapore equities: Poised for Sustainable Long‑Term Growth
Singapore equities: Poised for Sustainable Long‑Term Growth
The Singapore equity market is at an important inflection point, offering investors a compelling combination of strong dividends and long-term structural growth.
Lim Yuin
Chief Investment Strategist,
OCBC Group Research
The Singapore equity market has been a strong performer in recent years. Over the past five years on a total‑return basis, the STI Index has outpaced most major Asia Pacific and global indices. This reflects not only a meaningful turnaround from the previous five‑year period but also the benefit of Singapore’s strong currency and the attractive dividend profile of its equity market.
Recently, the Monetary Authority of Singapore’s (MAS) Equity Market Development Programme (EQDP), with S$6.5 billion committed to date, of which S$3.95 billion has been announced as at 19 November 2025, has further boosted attention and activity in local equities. With this support in place, the key question now is: How sustainable is the Singapore market’s strong performance beyond the EQDP stimulus?
Total returns of some Asia Pacific equity benchmarks over a 5-year period in Singapore Dollar terms
Source: Bloomberg
Sustainability of the Singapore Equity Market
To answer this, it is important to look beyond the EQDP and understand the broader forces driving the Singapore market. While the programme has provided a lift, the STI Index is also benefiting from Singapore’s growing role as a global safe haven amid prolonged geopolitical uncertainty — a trend that is likely to persist well beyond 2026.
This structural tailwind is creating a significant opportunity. Rising global capital flows seeking stability may continue to drive a re‑rating of Singapore equities. As liquidity increases, more growth‑oriented small- and mid‑cap companies (SMIDs) may be attracted to list on the Singapore Exchange, expanding the investible universe and creating a virtuous cycle of market development. Sustaining this re‑rating, however, depends on the STI’s ability to maintain strong performance and provide the macro‑liquidity needed to support SMID growth.
The chart below outlines a framework explaining the liquidity mechanism that can fuel the development of the SMID asset class in the Singapore equity market:
Source: Lion Global Investors
Singapore as a Global Safe‑Haven Growth Platform
A major driver of STI Index strength has been the Financials sector. Singapore’s safe‑haven status has led to rising assets under management across the three local banks, supporting solid earnings growth.
Source: Lion Global Investors, Company reports
Given continued geopolitical tensions worldwide, Singapore’s appeal as a safe haven should remain intact. This is likely to keep valuations of STI constituents supported and, importantly, ensure a steady flow of liquidity into the broader market, including SMID counters that rely on a healthy, active market environment to grow.
Broadening the Investible Universe: A Neutral Export Platform
Singapore’s strong track record in the Financials sector underscores its reputation as a neutral, trusted, and stable hub. Building on this, the equity market can further develop growth themes tied to Singapore’s role as a geopolitically neutral platform for cross‑border export activities.
Existing export‑related sectors within the STI, including Aviation, Energy & Marine, and Telecommunication, already leverage Singapore’s brand strength in Business‑to‑Government markets.
Looking ahead, emerging industries such as artificial intelligence, biotechnology, and space technology offer new opportunities. These areas are often subject to geopolitical sensitivities, and Singapore’s neutrality, positions it well as a launchpad for companies seeking cross‑regional expansion. This could encourage more Asian companies to establish their international headquarters here and list on the Singapore Exchange, widening the pipeline of future growth sectors, particularly within the SMID space.
Source: Lion Global Investors
Attractive Dividend Yields
Safe‑haven inflows into the Singapore banking system have contributed to lower domestic deposit rates, as foreign demand for Singapore dollars remains robust. Against this backdrop, the dividend yield of the STI Index stands out as increasingly attractive relative to short‑term Singapore dollar deposit rates. This enhances the equity market’s appeal for investors seeking stable income.
Source: Bloomberg, March 2026
Conclusion
The Singapore equity market is at an important inflection point, supported by multiple structural drivers:
- Safe-haven inflows driven by ongoing global geopolitical uncertainty
- Policy support through the MAS EQDP, which helps catalyse new growth themes and broaden the SMID opportunity set
- Attractive dividend yields compared with short-term Singapore dollar deposit rate
In short, Singapore offers investors a compelling combination of strong dividends and long-term structural growth. The outlook for the market remains robust as these drivers continue to reinforce one another.
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