To The Moon

The first half of 2026 has officially come to an end, and Singapore’s equity market entered the second half from a position of strength.

As of the end of June, the $Straits Times Index(STI.SI)$ closed at 5,170.65, up 11.29% year to date. June also remained positive, with the index gaining 2.64% for the month.

At first glance, this looks like a strong and steady market rally. But beneath the headline index, performance was much more uneven. Capital did not move across the whole market equally. Instead, investors concentrated on a few clear themes: banks, SGX, semiconductor equipment, industrial machinery, renewable electricity, China-linked ETFs, and selected REITs.

The first half showed that Singapore’s market was not simply defensive. It was also participating in the global search for growth, infrastructure, and income stability.

Beneath the STI Rally, Sector Performance Was Highly Divergent

The strongest sectors in H1 were mostly linked to technology, industrial upgrading and energy transition.

Semiconductor Equipment led the market with a gain of 228.69%, followed by Industrial Machinery at 209.67% and Renewable Electricity at 176.90%. Other strong sectors included Textiles, Heavy Electrical Equipment, Electronic Components and Technology Equipment.

This shows that investors were not only buying traditional Singapore defensive names. They were also looking for exposure to areas connected to AI infrastructure, automation, electronics, clean energy and industrial expansion.

However, this also creates a challenge for H2. When several sectors have already gained more than 100% in six months, the market may become less willing to reward stories alone. Further upside will likely require stronger evidence from earnings, margins, order books and cash flow.

In other words, H1 rewarded momentum. H2 may demand proof.

Banks and SGX Remained the Core Support for the STI

Among individual stocks, SGX was the standout performer, gaining 43.56% YTD. Its strong performance reflects healthier market participation and stronger investor activity, making SGX one of the clearest beneficiaries of improved market sentiment.

Banks also remained important pillars of the Singapore market. OCBC Bank gained 28.76%, DBS rose 19.35%, and UOB advanced 15.63%.

The strength of these names matters because banks carry significant weight in the STI. Their earnings resilience, dividend sustainability and asset quality will continue to shape the index’s direction in H2.

The first half therefore had two layers of leadership. On one hand, high-growth sectors delivered the strongest percentage gains. On the other hand, large financial names provided the stability and index support needed for the broader market to move higher.

ETFs Showed Strong Appetite for China Innovation and Regional Growth

SGX-listed ETFs also delivered strong performance in H1, especially those linked to China innovation and Asia-focused exposure.

The top-performing ETF, CSOP Star&Chinext50 S$, gained 63.26% YTD. Several China ChiNext and Asia ex-Japan ETFs also posted strong returns, showing that investors were using SGX-listed products to access regional growth themes beyond the Singapore domestic market.

This is an important signal. Singapore investors were not only buying local banks and blue chips. They were also positioning for broader Asian opportunities, particularly in innovation-heavy and emerging-market-linked areas.

For H2, this demand may continue if regional risk appetite remains healthy. But after such strong first-half gains, volatility could also increase. ETFs linked to high-growth markets may remain attractive, but they are unlikely to move in a straight line.

REITs Lagged, But Could Become More Relevant in H2

REITs were much quieter in H1. The best-performing REIT in the list, AIMS APAC REIT, gained 10.28% YTD, while most other leading REITs posted single-digit gains.

This shows that REITs did not fully participate in the broader equity rally. Concerns around financing costs, refinancing pressure and uneven rental growth may have continued to weigh on sentiment.

However, this weaker performance could make selected REITs more relevant in H2. If investors begin rotating back into income and yield stability, quality REITs may attract renewed attention.

The key word is selective. A broad REIT recovery is not guaranteed. Investors are likely to focus on REITs with stronger balance sheets, stable occupancy, lower refinancing risk and better-quality assets.

Looking Ahead: H2 Is Unlikely to Be a Simple Repeat of H1

The second half of 2026 is unlikely to be just a continuation of the first half.

The STI enters H2 with strong momentum, but expectations are now higher. The sectors that performed best in H1 may still have long-term structural support, especially those linked to semiconductors, industrial automation and energy transition. But after such sharp gains, investors may become more sensitive to valuation and earnings delivery.

At the same time, banks, SGX and selective REITs could remain important stabilisers. These areas may benefit if investors look for quality, income and more resilient earnings streams.

The market is therefore moving into a different phase. H1 was about identifying leadership. H2 will be about testing whether that leadership is sustainable.

Five Variables Likely to Shape SGX in H2

1. Whether banks can continue supporting the STI
   DBS, OCBC and UOB remain central to the index. Their earnings, dividends, asset quality and margin trends will be important indicators for the broader market.

2. Whether SGX can sustain its market activity momentum
   SGX was the top-performing stock in the list. If trading activity and investor participation remain strong, exchange-related earnings could continue to support its valuation.

3. Whether semiconductor and industrial themes can justify their gains
   The strongest sectors delivered exceptional H1 returns. In H2, the market will likely look for real earnings growth, order visibility and margin strength.

4. Whether REITs can recover selectively
   REITs lagged in H1, but selected names may benefit if investors rotate back into yield. Balance sheet strength and refinancing risk will remain key differentiators.

5. Whether ETF momentum can continue without sharper volatility
   China innovation and Asia-focused ETFs performed strongly in H1. They may remain attractive, but after large gains, price swings could become more pronounced.

Conclusion

The first half of 2026 demonstrated that Singapore’s market was stronger and more dynamic than a simple STI headline suggests. While the index gained 11.29% YTD, capital rotated into very specific areas: banks, SGX, semiconductor equipment, industrial machinery, renewable electricity, China innovation ETFs and selected REITs.

Looking into H2, the Singapore market remains constructive, but the investment environment is likely to become more selective. The strongest opportunities may come from areas where market momentum is supported by fundamentals, rather than from sectors that have already rallied mainly on theme-driven optimism.

H1 showed where capital wanted to go. H2 will test which parts of the market can continue to justify that confidence.