Singapore stocks’ record rally gets boost from ‘Goldilocks’ economy

Singapore stocks experienced a record-breaking rally, bolstered by robust economic growth, stable inflation, and a strong currency, according to Bloomberg on Saturday. The Straits Times Index has surged 23% this year, mirroring a similar gain in 2025. This marks the fifth consecutive quarter of gains for Singapore equities, the longest streak in a decade.

JPMorgan described the country's economic environment as a "Goldilocks" scenario, citing technology exports and productivity enhancements that are driving growth without causing excessive inflation. The bank has raised its target for the index to 6,500, implying a potential 13% increase from Friday's closing price of 5,743.59.

Fund managers at Jupiter Asset Management and Eastspring Investments also anticipate further gains, citing Singapore's expanding economy, stronger currency, the growth of the wealth-management sector, and investments in AI-related infrastructure. Banco DBS Group, Oversea-Chinese Banking Corp, and United Overseas Bank have been at the forefront of this rally, with all three banks recently reporting earnings that exceeded analysts' expectations.

OCBC, in particular, has delivered a stellar performance, surging 61% this year and becoming the best-performing stock in the 30-stock benchmark.

The strong Singapore dollar has further enhanced the market's allure, having appreciated nearly 6% against the US dollar over the past three years as investors seek refuge in safe assets amid geopolitical tensions. However, investors remain cautious due to stretched valuations and an increasing concentration in bank stocks. The Straits Times Index trades at more than 16 times projected 12-month earnings, significantly above its 10-year average and the highest valuation since the global financial crisis.

Fidelity International has been gradually reducing its exposure to Singapore as share-price gains have outpaced earnings growth. Currently, DBS, OCBC, and UOB account for nearly 60% of the index's market capitalization, up from 38% in July 2020, making the benchmark more dependent on the performance of these three banks and less representative of the broader Singaporean economy.