For the second half of this year, the bank has upgraded its rating on Singapore equities to “overweight” given that the benchmark Straits Times Index (STI) was up by some 4.7% due to safe haven flows.
The bank’s CIO also increased its year-end STI target to 4,250 points, up from 3,950 points as at its last report in mid May. The new target represents a P/E ratio of 13 times, Ng notes.
Catalysts, in the bank’s view, include a strong correlation between the DXY or US dollar index and the Singapore dollar (SGD), where any downward pressure on the US dollar (USD) will likely result on a stronger SGD.
Lower inflationary pressures and growth expectations may also prompt easing from the Monetary Authority of Singapore (MAS) within the next two monetary policy statements (MPS), either in July or by October, says Ng.
See also: Fullerton’s EQDP-supported fund to launch by 4Q2025; only invest in SGX stocks
In addition, the bank likes Singapore equities for their attractive dividend yields, which are superior compared to the 10-year Singapore government bond yield. Furthermore, a stable currency will appeal to investors who are looking for diversification in volatile markets, especially with bond yields getting lower, he adds.
The equity market development programme (EQDP) can also be another catalyst for the Singapore stock market, although the market has to “actually grow”.
In Ng’s view, the $5 billion fund set aside for the EQDP is “not enough” for the market, although it marks a “good start” by the Singapore government. The monies will encourage investors to appreciate the “hidden gems” within the Singapore equities market, he says.
See also: FTSE ST Mid & Small Cap Index generates 9% total return
On July 21, the MAS announced that it appointed its first pool of asset managers for the EQDP, who are: Avanda Investment Management, Fullerton Fund Management and JP Morgan Asset Management. A total of $1.1 billion under the $5 billion programme will go to these managers.
Add gold on weakness
CIMB, which was positive on gold in the first half of 2025, highlighted that gold rose by 25.9% year-to-date due to the current geopolitical situation and growth concerns in the US.
To this, Ng recommends investors add gold to their portfolios on any weakness. In addition to catalysts such as the ongoing instability in the Middle East and concerns on the US’s fiscal health, Ng notes that diversifying into other asset classes and geographies“has its merits”.
In addition, gold still enjoys several catalysts including its safe haven position, which looks to remain firm on the back of persistent pressures on the USD. Another plus for the precious metal is central banks remaining net buyers albeit at a slower pace.
CIMB’s year-end forecast for gold is at US$3,500 ($4,482.22)
‘Overweight’ fixed income
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CIMB is also “overweight” on fixed income as it sees predictable income in an uncertain world to be a “major advantage”.
Investors should add their positions in fixed income, which is “resilient”, “predictable” and “more stable”, says Ng.
To this end, he recommends investors focus on three- to seven-year tenors for lower price volatility. At the same time, investors should “get out of” the ultra-long tenors such as the 30-year bond if the market rallies.
