According to Geoff Howie, market strategist at the Singapore Exchange Group (SGX:S68
) , this is where the opportunities lie for Singapore and Southeast Asia, as digitalisation is accelerating due to AI and the shift from generative chat to agentic AI. “Therefore, we are pretty optimistic for 2026, not just the cyclical reasons, but also some of these strong structural reasons. The Singapore dollar, of course, has been in demand as well,” adds Howie.
Ambitious target for STI
The government’s recent approach to reviving Singapore’s equity market has helped the Straits Times Index (STI) hit a record high of just over 5,000 points, with most of the gains attributed to the three local banks here in Singapore.
Despite the Singapore overnight rate average (Sora) declining significantly over the past year, Howie says that the three local banks continue to report steady profits due to the hedging mechanism in place, which basically protects their net interest margins.
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“At the same time, the three local banks are also expanding their wealth management, and that really helps to drive their non-interest income amid the low interest rate environment,” he explains.
Meanwhile, Howie shares that there are recent reports from the various houses, which set ambitious targets for the STI. One of them was DBS Group Research, which has a target of 10,000 points by 2040.
“For that to happen, you have to double the size of Singapore’s economy and try to move to parity against the US dollar. Meanwhile, the most important thing now is really to be thankful for the banks and the other big-cap stocks for taking us to where we are today,” says Howie.
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Howie believes that while the banks and big-cap stocks are doing the heavy lifting, investors will have to look for potential new entrants to the STI to help carry the baton forward and realign the stock market with new growth drivers for Singapore over the next 10 to 20 years.
Dollar cost averaging — Popular investment strategy
Howie has some sound yet fundamental advice for investors. For example, average investors who are not keen to take pointed, targeted stakes can employ dollar-cost averaging (DCA).
“Through DCA strategy, investors are embracing discipline and enabling them to maintain certainty in tough times, and I think this matches the majority of Singapore retail investor mentality, which is much more comfortable with value trading,” he adds.
Based on Howie’s estimates, there are now around 100,000 investors employing the DCA strategy. While he is not supposed to recommend any products or investment strategies, he firmly believes this will work in the long run and is a pretty compelling investment style.
Keppel — Gold standard in transformation
On their part, companies cannot remain status quo and expect investors to give them a better valuation. They need to improve themselves and not just expect the market’s revitalisation to lift all boats.
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For Howie, Keppel (SGX:BN4) is the “gold standard” in this aspect. The long-time conglomerate is transforming itself into an asset manager of infrastructure, real estate and connectivity assets. “More importantly, they have improved their return on equity from 6.3% in 2019 to 18.7% in 2025 after removing non-core assets,” he says.
Keppel has won the attention of more investors. Howie adds that Keppel is ranked 10th in net institutional inflow year to date, down from second place last year, after Singtel. “In terms of earning visibility, it is actually pretty strong as two-thirds of its power capacity is contracted for the next three years, which helps to materially reduce earning volatility,” adds Howie.
Valuation expansion and institution participations
The market will not move solely on the power of large caps like Keppel. Small- and mid-caps, or SMIDs, need to pull their weight as well. Howie observes that the median price-to-book ratio of these stocks has since improved from about 0.75 times in 2024 and 1H2025 to about 1.0 times in 1H2025 and 1Q2026.
He adds: “For the net institutional flow in SMID, for 1H2025, we have seen an outflow of $150 million and have since improved to a net inflow of $807 million in 2H2025. For the first quarter of this year, until March 20, we are already seeing $430 million of inflow.”
