Lau Pa Sat is still going strong. Many stalls there now accept digital payments and the centre is airy and well ventilated. But, the price of an average meal has risen by about 100% since then.
The best bargain may not be in the hawker centre. It may be in the stock market. Much ink has been spilled on the Singapore Exchange’s (SGX) solid show in 2025. It has risen 20% in total return terms. Dividend gains represent a fourth of that.
There was a greater surge in repurchase activity. Share buyback consideration hit $1.9 billion. This is the highest in a decade and double the 10-year average. More than 120 SGX-listed companies executed buybacks during the year, including stalwarts in banking, industrials and telecoms.
Among the mid-caps, repurchases rose almost 40% y-o-y. Across the Straits Times Index (STI), buybacks now account for 1% of total market cap annually. This is a scale seen only in the US and Japan.
Next year could be even better. Share buybacks flourish when valuations are cheap and balance sheets bulge with cash.
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The arithmetic is hard to ignore. The STI sits at roughly 10 times forward earnings. This compares with 14–16 times for the Nikkei, Australian Securities Exchange and the broader Asia Pacific benchmarks. More than half of SGX trades at below its book value. This is the sort of statistic reserved for distressed markets, not a AAA-rated financial hub.
Every repurchased share boosts per-share earnings and equity returns. Singapore Inc is flush with liquidity. The Big Three banks closed 2025 with CET1 ratios north of 14%. REITs, after a rare bout of discipline, sit at around 37% gearing. This is well below their 45% ceiling.
Capital expenditure pipelines are thin. Only a few blue chips expect double-digit investment growth in 2026. M&A prospects are thin. Regional demand is steady rather than stirring.
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Hence, capital may loop back to shareholders. Dividend yields are already rich at 5%. This makes buybacks the more flexible outlet.
The banks are the most obvious frontrunners. The banks are trading at 1.1 times book value, which is a third below the rest of the region. They have both the capital headroom and the valuation logic to buy back shares decisively in 2026.
Telecoms are likely to follow. Singapore Telecommunications, with $3.3 billion in liquidity, has used repurchases as a way to signal confidence to the market. There is little reason to expect that strategy to change.
Industrial and service conglomerates also stand out. Many of these groups trade at 30–40% discounts to their sum-of-the-parts valuations. This makes buybacks the cheapest and most direct route to capturing embedded value.
Family-controlled conglomerates could round out the wave. Companies such as Jardine Matheson sit on cash-rich balance sheets. They trade below 0.8 times book, giving them strong incentives to repurchase shares. It acts as a bulwark against undervaluation and takeover attempts.
Singapore’s rules on buybacks are simple. The SGX framework allows companies to repurchase up to 10% of their shares each year with clear disclosure. Investors, frustrated by firms hoarding cash, welcome this clarity. A buyback may signal a re-rating.
Investors should be aware of the risks. A global slowdown could force firms to conserve cash. Buybacks executed out of habit rather than conviction may not create value. If funding costs rise after rate hikes, some companies may choose to fortify their balance sheets. Returning capital may become less of a priority.
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Nevertheless, the buyback backdrop remains supportive. STI valuations sit at just 10 times forward earnings, while corporate balance sheets are liquid. iFast Corp, a digital wealth management player, has $1 billion in cash. Investor pressure for capital discipline is rising. Boards that leaned into repurchases in 2025 look likely to accelerate in 2026.
Lau Pa Sat does not offer the same bargains that it did in 1997. Buybacks on the stock market may be the only game in town.
Nirgunan Tiruchelvam is head of consumer and internet at Aletheia Capital and author of Investing in the Covid Era
