The STI has outperformed the S&P 500 YTD, will this momentum continue into 2H2025? Let’s find out.

30 Jul 2025

By Danish Lim, Senior Investment Analyst for Phillip Nova

The Singapore index has surged 13.44% year-to-date in 2025, nearly doubling the S&P 500’s 7.38% gain — a standout performance that has caught the attention of global investors. As the nation approaches its 60th birthday, the question now is whether this momentum can carry through the second half of the year. In this article, we explore the factors driving the STI’s strong showing, why it remains an attractive value proposition, and which sectors may offer further upside in the months ahead.

As of 28 July Market Close:
STI: +14.79% YTD
FTSE ST All-Share (Top 98% by market cap): +14.58% YTD
FTSE ST Mid Cap: +8.04% YTD
FTSE ST Small Cap: +20.57% YTD

What makes the STI a compelling value proposition for investors?

The STI hit a new all-time high of 4,274.32 on 24 July. The SiMSCI Index also hit a new record of 436.32 on 21 July.

Singapore equities stand out as an attractive safe haven, with a dividend yield of ~5%.
Reciprocal tariffs of 10% are low compared to Asian peers.
Valuations: The STI is currently trading below the 5-year average of 15.4x at a TTM P/E of 12.1x. (-21% discount)
Companies are becoming more aggressive in returning capital to shareholders via higher payouts and share buybacks.
Crucially, the planned S$5bn to be spent on Singapore equities by MAS’s equity market development programme (EQDP) should boost mid and small caps.

For these reasons, we have raised our index targets for the STI from 4,300 to 4,500.

Review by sector

Consumer results have been subpar, a reflection of weak consumer spending in Singapore.

Thai Beverage (-13.76% YTD), Delfi (-3.37% YTD) as Cocoa futures hit a 60-year high in January.
Sheng Siong (+29.27% YTD) reported 7.1% revenue growth to S$403.0 million and a 6.1% rise in net profit in its 1QFY25 Business Update, driven by new store openings and festive Hari Raya sales.
Genting Singapore (-2.61% YTD) 1Q25 profit down 41% YoY as travel weakened due to a strong SGD and the temporary closure of Hard Rock Hotel for renovation reduced room availability amid RWS 2.0 upgrades.

Significant outperformers were utilities and telcos as investors flock to more defensive sectors.

Significant buybacks and dividend hikes. Yields started to match Banks.
Singtel (+30.84% YTD) unveiled its first S$2 bn buy-back program, funded via capital recycling.
Keppel (+19.44% YTD) and Sembcorp (+38.22% YTD) are set to open new power plants in 2026. Power demand driven by greater prevalence of EVs, renewables, data centres in Singapore.

Banks and S-REITs in “wait-and-see” mode until rates decisively fall and tariff uncertainty clears. But outflows have halted.

3 banks all reported single-digit NIM compression in 1Q25, guided for more if Fed cuts again.
But volatile market conditions helped boost capital market, wealth management, and trading operations.
UOB (+1.64% YTD) suspended 2025 guidance due to tariff threats.
Pure-play data centre Keppel DC REIT (+7.34% YTD) joined the STI, expected to increase S-REITs’ combined weight in the index to over 10%. Increases the total number of S-REITs in the index to 8.

Shipping and transportation have been victims of trade war. Technology rebounded as the AI theme started to regain its fire.

Risk of fees on Chinese-made vessels docking in the US hurt Yangzijiang Shipbuilding (-15.38%)
Venture Corp (-5.86% YTD): ~73.5% of FY24 Revenue came from outside Singapore.
AEM (+14.58%): Semiconductor test solutions, “stress-test” finished chips before they leave the factory [Back-end]
UMS Integration (+47.57%): Component manufacturer (e.g., Precision vacuum chambers) for Applied Materials [Front-end]
Frencken (+46.90%): Mechatronics modules for lithography giants, notably ASML. [Front-end]

Other Homegrown Opportunities to look at – Non-STI Stocks with Market Cap >S$3B:

Keppel DC REIT
Comfort DelGro’s (+7.43% YTD) overseas revenue topped 50% of total revenue for the first time in history
SIA Engineering (+32.07% YTD) FY24/25 net profit increased 44% YoY, recently announced that it had signed S$1.3 billion services agreements with Singapore Airlines and Scoot.
Suntec REIT (+0.85% YTD), CapitaLand Ascott Trust (+5.61% YTD), Olam Group (-13.93% YTD)

Stocks with Market Cap between S$1B and S$3B:

Sheng Siong is the largest, 1QFY25 revenue increased 7.1% YoY
Parkway Life REIT (+7.63% YTD), and Singapore Post (+15.09% YTD)
StarHub (+2.48% YTD), Raffles Medical (+18.82% YTD)

Stocks with Market Cap between S$250M and S$1B:

Food Empire (+141.72% YTD), the largest stock,1QFY25 revenue was up 16.3% YOY. Southeast Asia led contributions for the first time, driven by a 44.6% surge in Vietnam sales. Main markets are central Asia– Russia, Ukraine, Kazakhstan.
Wing Tai (+13.71% YTD), Sasseur Reit (+0.74% YTD), PropNex (+46.27% YTD), MoneyMax Financial Services (+100% YTD), Q&M Dental (+44.64% YTD), Banyan Tree (+95.65% YTD).
Yangzijiang Financial (+124.10% YTD), Centurion Corporation (+80.21% YTD)

Banks:

3M-SORA continued to slide down to 1.85%, the lowest since September 2022.
We expect the 3M-SORA to continue declining as Fed rate cuts are expected.
Nevertheless, lower rates led to an increase in Singapore loan growth (May25: 5.83% vs Apr25: 4.5%).
A surge in trading activity also boosted non-interest income (NOII)

BULLISH: We believe banks can maintain their NIMs from the steepening yield curve and higher CASA levels.

Dividend yield of ~5.7% is attractive as capital return initiatives continue in FY25 and share buybacks improve ROE & EPS.
A beneficiary of the trade war has been trading volumes, with YTD 2025 volumes up ~24% YoY.

BBG 12M Tgt Px: DBS S$47.43, UOB S$38.27, OCBC S$17.46

S-REITs:

At dividend yield of 5.24% and P/NAV of 0.9x (>1x s.d.), we see this as an attractive entry point with interest rate cuts on the horizon.

BULLISH stance on S-REITs:

Trading at a forward dividend yield spread of 3.9%.
Should see lower finance costs due to interest rates decreasing and interest savings from loan repayments. Most REITs already reported interest savings.
S-REITs have reported minimal impact from tariffs. Potential effects are likely 2nd or 3rd order in nature, for example via lower consumption due to a slower economy.
We favour AI-related REITs, retail and hospitality sub-sectors, supported by positive rental reversions.
Catalysts include BLACKPINK concert in Nov’, inorganic growth through asset recycling, and interest rate cuts.

How to take a view on the Singapore market?

Take a view via the SGX MSCI Singapore Index Futures (SiMSCI) Futures. Trade at only $1.38*, click here to learn more about our exclusive rate for the SiMSCI Futures now.
Take a view via Singapore stocks. Trade Singapore stocks from as low as 0.08% with no minimum commission.
You can also consider trading the Phillip MSCI Singapore Daily (-1X) Inverse ETF and the Phillip MSCI Singapore Daily (2X) Leveraged ETF.

Understanding the ETF products

1) Phillip MSCI Singapore Daily (2X) Leveraged ETF (LSS)

Designed to achieve 2 times the daily return/losses of the MSCI Singapore Index. The product has a published leveraged factor of 2 times and will apply the returns for a particular day only. Returns/losses for holding period more than 1 day will be compounded.

2) Phillip MSCI Singapore Daily (-1X) Inverse ETF (SSS)

Designed to deliver the opposite of the daily performance of the MSCI Singapore Index. That means investors can make money when the market or the underlying Index declines, but without having to sell anything short. Returns/losses for holding period more than 1 day will be compounded.

Trade the SiMSCI Futures, Singapore stocks and ETFs Singapore stocks (with no minimum commission) on Phillip Nova 2.0 now! Click here to open an account now!

Trade Stocks, ETFs, Forex & Futures on Phillip Nova

Features of trading on Phillip Nova

Gain Access to Over 20 Global Exchanges
Capture opportunities from over 200 global futures from over 20 global exchanges

Trade Opportunities in Global Stocks
Over 11,000 Stocks and ETFs across Singapore, China, Hong Kong, Malaysia and US markets.

Over 90 Technical Indicators
View live charts and trade with ease with over 90 technical indicators available in the Phillip Nova platform

Trade Multiple Assets on Phillip Nova
You can trade Stocks, ETFs, Forex and Futures on a single ledger with Phillip Nova

Free Phillip Nova Demo Account

Fast and Secure Online Account Opening

An Exchange Traded Fund (ETF) is a marketable security that is formed to track nearly anything, ranging from a specific index, sector, commodity, or increasingly, theme. They are most commonly used to track a basket of stocks, and can typically be accessed through the same channels as regular stocks. ETFs are typically separated into passively-managed ETFs that simply mirror the security they are tracking (e.g. the STI), and actively managed ones that attempt to deliver higher returns or specific investment objectives, often with a pre-specified theme in mind (e.g. ARK Invest’s Innovation ETF).

Why should I trade in ETF CFDs?

ETFs have been growing in popularity over the years. 2020 was the best year for ETFs yet, with global equity ETFs seeing more than $1T in inflows within a 12-month period. Using CFDs to gain exposure to ETFs allows for greater capital efficiency because only a portion of the contract value is required as margin to establish a position.
ETFs are particularly popular with investors seeking a relatively hassle-free investing experience, while desiring exposure to a range of specific and relatively understandable securities. Trading ETF CFDs brings greater convenience by eliminating the need for traders to hold multiple currencies in order to access global ETFs.
An investor wanting exposure to the post-pandemic economic recovery could open a position in the well-known SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500. Another investor that may be convinced of the future importance of Environmental, Social and Governance concerns (ESG) may find the increasing selection of ESG-themed ETFs that track a basket of high ESG-rating companies to be a good investment, rather than cherry-picking individual equities by hand. ETF CFDs can act as a powerful tool for traders can profit from both directions of the market by taking on long or short positions.

A look at two ETF CFDs we offer:

1) Has the ARKK been sunk?

ARK Innovation ETF (ARKK) ARKK is an actively managed ETF by ARK Invest that invests in a range of companies based on their innovative and industry-disrupting potential. ARKK’s largest holdings are in companies such as Tesla, Square, and Zoom. ARKK is down around -33% from peaking on 12^th Feb and is currently in the red for the year to date as the market experiences a risk-off outflow of funds. Superstar fund manager Cathie Wood has however been consistently doubling down on her bets, buying even more shares in growth stocks that are going through their own tumultuous periods such as DraftKings, Peloton, Teladoc, and Tesla. In her view, ARKK is playing the long game, and remains steadfastly convinced in the long-term prospects of these growth stocks beyond this current bout of volatility. Similarly on outflows, investors are still betting big on ARKK as ARK Invest has only lost about $1.2B in assets this year across all its six funds, compared to seeing an inflow of $15.1B during the same period. Recently, investors have been nervously eyeing ARKK’s basket of tech stocks as their future earnings potential remain vulnerable to erosion through high inflation – the dominant concern of the market in recent weeks. As commodities – the major contributor to the recent heightened inflation fears – drops sharply from record highs, are investor concerns over hyperinflation overblown?

2) Searching for exposure to Asian equities?

iShares MSCI Asia ex Japan ETF (AAXJ) The AAXJ is currently trading -10.6% adrift of all-time highs seen in February, giving up gains in tandem with an Asia-wide equity sell-off at the time. Given that slightly over 40% of the ETF’s holdings are based in China, the ongoing tumult seen in Chinese equities currently have carried over nearly perfectly in the AAXJ, as Chinese investors take a breather after the stellar gains made over the past year. Looking ahead, Asia – and particularly China, is steaming ahead with its economic recovery. China is widely expected to be one of the best-performing major economies this year, providing a major boost to the outlook for corporate earnings. As the rest of Asia and the world gradually opens up their own economies, AAXJ is likely to again benefit from strong Asian outperformance amidst a strengthening trade outlook.

CFD is available for trading on Phillip MetaTrader 5 (MT5).

Features of trading CFD:

Trade in both the bull and the bear markets
The ability to enter a long and/or short position allow traders to take advantage of both rising and falling markets.
Smaller barrier to entry
Flexible and smaller contract sizes. This means that traders will be able to enter into a contract with a modest amount of capital.
No expiration date or risk of delivery
Unlike futures which commonly have a fixed expiration date, CFD allows traders to perpetually hold the position(s). CFD is cash settled, no need to worry about the delivery of the underlying asset.

Benefits of using Phillip MT5:

Trade at zero commission on a dynamic platform that offers low spreads. Integrated with Autochartist and Trading Central Indicators, and available on mobile, web and desktop app, you will never miss a trading opportunity with Phillip MT5.

Register for a FREE 30-day Phillip MetaTrader 5 Demo Account

More Market Trends