The Straits Times Index (STI) has a “slightly good chance” of crossing the 4,000-point mark again in 2H2025, says OCBC Investment Research’s Singapore strategist Carmen Lee. However, this will depend on how Singapore’s three listed banks perform, as they make up around half of the bellwether index by weight.
“Watch out for the [banks’] results, which will be coming out soon,” says Lee at a media briefing on June 27. The three local banks are expected to release their financial results for 1HFY2025 ending June 30 in early August.
Tensions in the Middle East have had a “somewhat muted” impact on Singapore’s banks so far, and Lee thinks “the environment is fairly conducive still”.
In response to The Edge Singapore, Lee says the banks had already lowered their full-year FY2025 guidance at the release of their 1QFY2025 results in May. “So, this quarter, I would think that should be okay, unless the banks’ earnings take a very strong hit — [but] that’s not my base case scenario. If regional trade still continues, then it should still be a good year for banks and that will bode well for the STI.”
The STI, whose constituents are the top 30 Singapore-listed stocks by market capitalisation, moved from a 2025 high of 4,005.18 points on March 28 to a 2025 low of 3,372.38 points on April 9. The March 28 peak also marked an all-time high, and it was the first time the STI had crossed the 4,000-point mark.
Looking ahead, Lee’s 12-month target for the STI ranges around 4,060 to 4,280 points.
IPO pipeline ‘strong’
While the Singapore Exchange (SGX) has seen just one initial public offering (IPO) so far this year, Lee says “the pipeline seems to be quite strong”.
Two companies, Info-Tech Systems and Lum Chang Creations, lodged their preliminary prospectus last week.
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Lee draws a link between the STI’s psychological 4,000-point mark and market sentiment for new listings. “I feel the IPO market tends to come alive very strongly when the market is up. So if the STI reaches 4,000 or 5,000 [points], then we will become a very brisk sort of IPO market.”
Still, the size of the listing matters. “Obviously, you would want to have more [IPOs], but with a bigger IPO, those are the companies that will be part of your portfolio… The truth is that it’s really about the size of the IPO; it’s not about the number of companies that are listed.”
Lee is optimistic about the work of the Monetary Authority of Singapore’s equities market review group, which unveiled in February its first tranche of measures to stem a series of delistings from the local bourse and reinvigorate the stock exchange.
“In the last 30 years that I have been tracking the market, I will say this, to me, is by far one of the most concerted efforts to try to revive the market,” says Lee.
The REIT sector could be the SGX’s niche as it faces off against mega-cap tech stocks in the US and a string of large, China-linked IPOs in Hong Kong, she adds. “I think the [Singapore] Exchange is also trying to explore a lot more secondary listings… but this will take maybe three to five years.”
