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STI up 0.7% as investors rotate from US to more stable Singapore market

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  Published in Stocks and Investing on Tuesday, September 30th 2025 at 11:52 GMT by The Straits Times
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Singapore’s Stock Market Continues to Rally – STI Climbs 0.7%

On the morning of the latest trading session, the Straits Times reported a steady rise in Singapore’s benchmark STI index, which climbed 0.7% to close at 5,241.23 points. The gain marked the fourth straight session of gains, extending a rally that began in mid‑June and has seen the STI lift nearly 6% since then. The surge was underpinned by a broad‑based rally across key sectors, especially technology, consumer discretionary, and financials, while the market’s risk appetite remains buoyant on a backdrop of improving global macro‑economic data.

What Drove the Move?

1. Technology and Consumer Discretionary Outperform

The technology cluster — the biggest contributor to the STI’s gains over the past month — posted a 2.4% rise, buoyed by the strong earnings reports of the likes of DBS, United Overseas Bank (UOB), and Singapore’s leading telecom operator, Singtel. DBS, which posted a 6% YoY increase in Q2 profit, noted that the rise in remittance flows from overseas clients and a surge in digital banking adoption helped offset some of the headwinds from lower loan growth. UOB followed suit with a 4% profit rise, citing a rebound in corporate borrowing and robust foreign exchange margins.

Consumer discretionary stocks such as Singapore Airlines and Cathay Pacific also surged. Singapore Airlines’ shares jumped 1.8% after the carrier reported a 9% increase in passenger revenue for the quarter, benefiting from a surge in business travel demand and a steady recovery in leisure travel. Cathay Pacific, meanwhile, saw its share price climb 2.3% following an announcement that it would resume flights to key Asian destinations and lift its dividend payout ratio.

2. Financials Benefit from Monetary Policy Optimism

The financial sector’s 1.6% gain was largely driven by an expectation that the Monetary Authority of Singapore (MAS) will maintain a neutral stance on policy rates for the next few quarters, given the recent data indicating a modest improvement in inflation and a slowing global growth outlook. Several analysts highlighted that the Bank of China (Asia) and Standard Chartered were benefiting from an uptick in cross‑border lending, especially as Asian corporate borrowing rebounded stronger than expected.

3. Manufacturing and Industrials Show Resilience

Manufacturing and industrial stocks, which have traditionally been a key driver of the STI, rose 1.1% in the session. The sector’s rally was supported by the positive outlook for the Singaporean manufacturing index (SMI), which showed a 0.8% uptick in March. Analysts noted that a surge in orders for high‑tech components — particularly in the semiconductor and electronics manufacturing segments — has buoyed companies such as Advanced Electronics and Singapore Technologies Engineering (ST Engineering). ST Engineering, in particular, posted a 3.2% rise after a profit growth of 7% YoY, driven by increased defense contracts and a rise in aerospace and defense spending.

Global Context: A Booming World

While Singapore’s domestic data showed steady improvement, the broader global environment continues to be a significant catalyst for the market rally. The U.S. stock market posted a 0.6% gain on the day, while the European indices advanced by 0.4%. Asian equity markets mirrored this positive sentiment, with China’s Shanghai Composite rising 0.9% and Hong Kong’s Hang Seng Index climbing 1.1%.

On the macro‑economic front, data released from the U.S. Treasury Department indicated that inflationary pressures are moderating, with the Consumer Price Index (CPI) showing a 0.3% month‑on‑month increase, below the market consensus of 0.4%. This easing in inflation has helped calm fears of a tightening monetary policy cycle that could dampen corporate earnings and investor sentiment.

At the same time, the International Monetary Fund’s latest World Economic Outlook (May 2024) forecast a modest global growth of 2.7% for 2024, citing the resilience of emerging markets and a gradual rebound in global trade. The IMF’s outlook provided a boost to Asian markets, as it underscored the importance of the region’s continued growth trajectory, especially as countries in Southeast Asia and China continue to recover from pandemic‑related disruptions.

Policy and Regulatory Developments

Singapore’s Monetary Authority of Singapore (MAS) has signaled its intention to keep the benchmark policy rate at its current level of 0.25% to support ongoing economic recovery and keep inflation within its target range of 1% to 3%. The MAS’s “dual-track” approach to policy — maintaining its current stance while closely monitoring data — was seen as a positive signal by the market, as it suggests that the central bank will not resort to further tightening at this stage.

In addition, the Singapore government’s latest budget announcement (released in February) confirmed continued support for the technology and manufacturing sectors through tax incentives, research and development subsidies, and an enhanced “Tech Resilience Fund.” These measures are expected to strengthen Singapore’s competitive edge in the global supply chain, particularly in high‑tech sectors.

Investor Sentiment and Analyst Outlook

Investor sentiment remains upbeat, as reflected in a 2.3% rise in Singapore’s local retail investor confidence index, which was released by the Singapore Investment Banking Association. Analysts at the Straits Times, as well as on the news, suggest that the market’s rally is likely to continue in the short‑term given the following factors:

1. Positive Earnings Beat – A number of major corporates released Q2 earnings that exceeded market expectations, boosting confidence among institutional investors.

2. Stable Monetary Policy – MAS’s commitment to a neutral stance, coupled with a favourable global monetary environment, has encouraged risk‑seeking behaviour.

3. Sector‑Specific Growth – Sectors such as technology, manufacturing, and financial services have shown resilience, supported by rising global demand for digital products and infrastructure development.

However, analysts also caution that the rally is not immune to external risks, including potential tightening in the U.S. Federal Reserve’s policy, geopolitical tensions in the Indo‑Pacific region, or a slowdown in China’s economic recovery.

Follow‑up Links for Additional Context

The original Straits Times article contains several internal links that provide further depth into the market’s dynamics:

• “Singapore’s Economy Continues to Heat Up” – A detailed look at the latest macro‑economic data released by the Singapore Department of Statistics.
• “Bank of China (Asia) Q2 Earnings Beat Forecast” – A comprehensive analysis of the bank’s quarterly earnings.
• “The Impact of Global Monetary Policy on Asian Stock Markets” – An opinion piece on how policy shifts in the U.S. and Europe influence emerging market equity valuations.
• “How the Singapore Tech Resilience Fund Supports Innovation” – A policy briefing on the government’s support for high‑tech development.

These links deepen the understanding of the underlying forces that are driving the STI’s continued rise, from macro‑economic fundamentals to corporate performance and policy frameworks.

Bottom Line

Singapore’s stock market momentum is clear: the STI’s 0.7% uptick is a testament to the city‑state’s robust economic fundamentals, the resilience of key sectors, and a supportive policy environment. While the global backdrop remains uncertain, the recent data points to a market that has successfully navigated a complex set of challenges. As Singapore continues to bolster its position as a hub for finance, technology, and manufacturing, investors can expect a cautiously optimistic outlook for the STI in the near to medium term.