To The Moon

Global equities delivered mixed returns in July, with strong gains in Hong Kong, Singapore and selected Southeast Asian markets offset by weakness in Japan, South Korea and China. 

July's market leadership differed markedly from 1H26. Semiconductor-related stocks that had generated some of the strongest gains in the first half of the year experienced profit-taking, while banks, REITs, property and transport-related stocks emerged among the month's leading performers.

Unlike several North Asian markets, Singapore benefited from its heavier weighting in financial, industrial and transport-related stocks, helping local benchmarks outperform despite profit-taking in semiconductor-related names. 

The $Straits Times Index(STI.SI)$ 's 8.8% advance in July marked its strongest monthly performance since November 2020, with the FTSE ST All-Share Index and FTSE ST Financials Index also posting their strongest monthly gains since November 2020. The July gains brought the annualised total return of STI ETFs since the end of 2019 to 13.1%, while monthly STI ETF dollar-cost averaging generated an indicative CAGR of 10.7% over the period.

The STI also formed an all-time high of 5,713.19 on 29 July. STI banks averaged gains of 13.3% in the month, with $OCBC Bank(O39.SI)$ remaining the top-performing STI constituent. This week the trio will report their 1HFY26 results, with investors focused on whether record non-interest income and loan growth have continued to offset the impact of lower local interest rates on earnings.

Financial Services was the most represented sector among the 30 strongest performers in July with market capitalisations above S$1 billion, accounting for multiple stocks that included $Great Eastern(G07.SI)$ , OCBC, $DBS(D05.SI)$ , $UOB(U11.SI)$ , $UOB Kay Hian(U10.SI)$ , $CapitaLandInvest(9CI.SI)$ . The 30 strongest performing stocks which maintained a market capitalisation of S$1 billion at the end of July are tabled below. 

Note: ADT refers to Average Daily Trading Turnover, NIF refers to Net Institutional Flow, TR refers to Total Return. Data as of 31 July 2026.

July's strongest performers among stocks with market capitalisations above S$1 billion were led by $Great Eastern(G07.SI)$ , $PanUnited(P52.SI)$ and $OCBC Bank(O39.SI)$ , which generated total returns of 34.6%, 19.3% and 17.5%, respectively. On 31 July, Great Eastern reported strong 1H26 results, with double-digit growth in new business sales, embedded value and earnings, supported by resilient insurance operations, stronger investment performance and a progressive dividend policy.

SIA Leads Inflow as Sembcorp and DBS Lead July Outflow

Institutions net sold S$464 million in July, increasing cumulative year-to-date net institutional outflow to S$1,287 million at end-July. Net institutional buying was concentrated in selected transport, infrastructure and industrial names, led by Singapore Airlines, Keppel and SATS. 

$SIA(C6L.SI)$ led net institutional inflow again in July, coinciding with its consensus target price increasing from S$6.77 to S$7.21 as analysts raised earnings forecasts. In contrast, $Sembcorp Ind(U96.SI)$ led net institutional outflow in July, coinciding with its consensus target price easing from S$7.06 to S$6.71 as analysts lowered earnings forecasts ahead of its 13 August results announcement.

$DBS(D05.SI)$ recorded the second-largest institutional outflow in July, consistent with portfolio rebalancing following the increased index weightings and sustained outperformance of Singapore bank stocks. Since the end of 2019, the STI banks have not only increased their weightings in local indices, they have also more than doubled their weightings in the MSCI AC ASEAN Index and FTSE ST ASEAN Index. Retail investors net bought S$545 million over the month, lifting cumulative year-to-date retail inflow to S$2,383 million.

The 20 stocks with the highest net institutional inflow and outflow in July are tabled below. 

Note: ADT refers to Average Daily Trading Turnover, NIF refers to Net Institutional Flow, TR refers to Total Return. Data as of 31 July 2026.

Growth Resilience, Cost Pressure 

Singapore enters 2H26 with stronger economic momentum than anticipated six months ago. Private-sector economists now forecast GDP growth of around 3.5% in 2026, moderating to about 2.5% in 2027. While medium-term forecasts point to slower growth, these projections remain subject to considerable uncertainty around the durability of the AI investment cycle, geopolitical developments and global trade conditions.

In July, the IMF noted that Singapore is entering this period of heightened uncertainty "from a position of strength", supported by resilient AI-related semiconductor demand, infrastructure investment and a well-capitalised banking system.

MAS tightened policy for a second consecutive review in July, increasing the rate of appreciation of the S$NEER policy band very slightly while leaving the width and centre unchanged. The move reflected expectations that imported cost pressures would rise through 2H26, while robust 2Q26 advanced GDP growth and resilient AI-related manufacturing activity provided room for further tightening.

Narrower Discount, Broader Earnings Watch

For equities, the backdrop is more discriminating and likely to require greater selectivity than at the start of the year.

Singapore's growth outlook continues to be supported by technology exports, construction activity, financial services and policy-led efforts to deepen market liquidity. However, after the market's strong run, investors may need to rely more on companies delivering earnings growth than on further gains from rising valuations. Investor focus in 2H26 may therefore shift more toward earnings resilience, visible cash flows, dividend capacity and value formation. 

Recent sector-level positioning suggests institutional flows have broadly tracked current financial year EPS growth expectations across 2026, reinforcing the market's focus on earnings delivery. Technology and Industrials have been among the sectors where earnings momentum and institutional inflows have been most closely aligned.

The STI's discount to consensus target price has narrowed materially in July, leaving less valuation support following the recent rally. At the same time, indicative STI EPS growth remains around 10%, while consensus forecasts point to broader earnings growth across sectors in the following financial year.

Rates Remain a Valuation Risk

Global interest-rate conditions are also less supportive. The Federal Reserve left rates unchanged in July for a fifth straight meeting, underscoring that inflation concerns remain. With US economic activity and labour-market conditions still resilient and inflation above target, Treasury yields could remain elevated, posing a valuation risk for equities, REITs and other rate-sensitive segments.

Market Drivers & Value Levers

Five key equity drivers remain in focus: AI-driven productivity, investment-led growth, infrastructure and connectivity, trade and technology fragmentation, and Singapore's global hub competitiveness.

At the stock level, the focus is increasingly on execution, with investors differentiating between companies that can convert these tailwinds into stronger earnings, cash flow and shareholder value. Value creation levers such as growth and transformation, asset optimisation, capital returns and value unlock also help identify where shareholder value is being generated.