Singapore’s STI hits new high as investors are drawn to safe havens amid global risks

[SINGAPORE] The Straits Times Index (STI) notched a new record of 4,011.78 points on Wednesday (Jul 2) as Singapore draws a rush of investors seeking safe havens from geopolitical risks.

This is the second time the benchmark index has crossed the 4,000 threshold. The STI previously hit a record of 4,005.18 on Mar 28 before closing the day at 3,972.43.

The Singapore market has been outperforming global stocks through the year, Morgan Stanley analysts noted in the Singapore Equity Strategy Mid-year Outlook released in May.

As at Wednesday, the index has gained about 5.9 per cent through the year – bringing its year-to-date gains slightly over that of the S&P 500, which is up by around 5.4 per cent.

“The STI has held up (in the) year to date despite global volatility. Worsening US policy uncertainty, slower China growth and the intensifying hostilities in the Middle East (are) likely to bolster safe-haven flows to Singapore,” Maybank said in a Jun 27 report.

“Indeed, so far this year, defensive sectors such as telcos and utilities have seen the strongest outperformance. At the same time, flows rotating out of the banks seem to have plateaued (following massive inflows in 2024 to play the interest rate hike cycle), while outflows from real estate investment trusts (Reits) seem to have also bottomed,” it added.

The STI took a harsh beating earlier on in April, when US President Donald Trump’s announcement of his Liberation Day tariffs roiled global markets. The index plummeted to an intra-day low of 3372.380 on Apr 9 – an 11 per cent year-to-date loss, ShareInvestor data showed.

However, it has since made steady recovery, as the city-state’s safe-haven status remains intact.

Favoured for its defensive qualities, Singapore continues to be one of investors’ preferred choices among Asian markets, ranking behind India, said Morgan Stanley analysts.

Jose Torres, a senior economist at Interactive Brokers, pointed to the Republic’s economic stability and the “attractive yields” offered by its stocks as drivers contributing to the equity market’s safe-haven status and “impressive level of outperformance”.

“Singaporean shares, furthermore, have inexpensive valuations when compared to the US. Additionally, its equity space saw a significant benefit from investors incrementally neglecting the US early in the year and favouring companies from across the oceans in efforts to diversify internationally,” he said on Wednesday.

UBS analysts on Jun 26 updated Singapore equities from “neutral” to “attractive”, citing the market’s defensive appeal amid geopolitical uncertainty.

They highlighted a “combination of safe-haven characteristics”, including proactive capital-management initiatives undertaken by a handful of companies and a stronger Singapore dollar against the greenback.

“The market’s defensive traits should anchor its performance, while the ongoing equity market reform and capital-management initiatives could provide catalysts for a further re-rating of valuation multiples,” noted the analysts.

“We are selective among real estate investment trusts, with a preference for those with Singapore-based assets, and a bias for data centre and retail Reits,” they added.

Part of the rally

As at the mid-day trading break, CapitaLand Integrated Commercial Trust was one of the most heavily traded stocks on the Singapore Exchange. The counter had climbed 2.3 per cent to S$2.23 with some 39.7 million units changing hands.

Yangzijiang Financial was up 4 per cent at S$0.78, with some 20.9 million shares transacted.

The counter had advanced as much as 6.7 per cent earlier in the morning on news of its incorporation of Yangzijiang Maritime Development – a company it is proposing to spin off – as a wholly owned subsidiary in Singapore.

Other names that joined the rally included property player UOL, which was up 8 per cent at S$6.76, and telco giant Singtel, which rose 1.3 per cent to S$3.91.

The local lenders, which form around 50 per cent of the STI as at May 2025, were performing mixed by mid-day. OCBC gained 0.2 per cent to S$16.44, while DBS declined 0.5 per cent to S$44.90 and UOB lost 0.1 per cent to S$36.04.

In the year to date, DBS was up 2.7 per cent, while OCBC had fallen 1.5 per cent and UOB had retreated 0.8 per cent.