60 reasons to stay invested in Singapore
This year marks the 60th year since Singapore’s independence – from swampland to a thriving metropolis. Singapore has undergone a remarkable transformation in the last 60 years and a host of activities, discounts, promotions and special celebrations have been planned for this year as the nation comes together to celebrate this significant milestone. Retail outlets, grocery stores, restaurants and even places of interests have special packages, and many companies have also planned special events. Although exhibit 1 provides the top 60 reasons to invest in Singapore, there are many other benefits as to why investors should continue to stay invested in Singapore in the coming decade. Singapore’s success in the past 60 years was no pure luck, but rather a carefully planned series of developments and investments that brought Singapore’s focus from textile and then electronics manufacturing in the 60s and 70s to a digital nation now. Moving into the coming decade, the combined regional growth and rising affluence will bring about more opportunities in this region.
Exhibit 1: 60 reasons to stay invested
Source: Bank of Singapore
Singapore’s stability is often stated but has been under-appreciated for a long while
With rising global uncertainty – from elevated geopolitical tensions and higher trade tariffs – stability is increasingly going to be more valuable. Singapore’s economic stability is often over-stated, but at times seems to be under-appreciated. In a climate of rising geopolitical tensions, one of the Singapore’s key investment merits is its economic stability. This is sharpened through years of strategic government initiatives and policies; well-established housing and well-connected infrastructure; and a transparent and robust financial system. The political landscape is stable, with no change to the leading political party since independence. This has allowed for the continuation of several long-term initiatives to enhance infrastructure and develop core skills to meet changing needs.
Providing a safe haven, with Straits Times Index (STI) hitting new historical highs above 4,000
The recent re-rating of the Singapore market was largely fuelled by its safe haven status as seen from the good gains by defensive stocks. The benchmark STI has provided a stable growth of 3.0% per annum over the past 20 years. A safe haven status has not only attracted a constant stream of foreign investments into key industries and recently into the stock market, but it also means that the island will remain a key wealth hub as more family offices and assets flow into the country. Strong foreign investments reinforce the country’s appeal to foreign companies and is also reflective of the confidence of foreign investors despite elevated global uncertainties.
In Asia, the wealth and credit card business is growing. Asia is going to be home to more and more middle-class families due to rising affluence. It is also estimated that Asia will account for more than 50% of the world’s wealthiest people and this is a key indicator for the region. The Asia Pacific region is projected to account for nearly half of all new high net-worth individuals (HNWI) between 2025 and 2028. This will be supported by digital transformation happening throughout Asia, policies encouraging entrepreneurship, higher regional trades and investments.
For the STI, the 4,000 psychological barrier is key, and having convincingly pierced it recently (the STI cracked the 4,000 level on 2 July 2025 and has since stayed above this level despite market volatility), the STI looks likely to hold at current levels, pending no drastic deterioration in the external environment. It is up 10.4% year-to-date (YTD).
A trip back in time showed that the Singapore market capitalisation 20 years ago was USD247b. Now, it is USD502b or a compounded annual growth rate of 3.5%.
High dividend yields – a key differentiator
As a wealth hub and with funds looking for attractive yields in an environment that is likely to see lower interest rates, Singapore listed companies have consistently offered one of the highest dividend yields in this region and globally. The strong SGD also means that foreign investors investing in local equities in SGD terms have enjoyed both good currency gains as well as steady dividend income. With the prohibitive property measures for foreign investors buying into local residential properties, Singapore equities offer a compelling alternative for investors holding SGD. At current levels, the average dividend yield for the STI is 5%. This is attractive for investors looking for stable and sustainable long-term returns.
In the Singapore Treasury bills market, the average auction amount in 2025 was SGD7.4b versus applications of SGD17.5b or a cover ratio of 2.4x. Demand far outstrips supply. The recent auction closed with a cut-off yield of 1.79% (auction results on 17 Jul 2025). As an indication, the cut-off yield was an average of 3.85% in 2023, 3.46% in 2024 to around 2.52% so far this year. However, these rates are still higher than the averages seen pre-Covid at around 0.58% in 2020 and 0.37% in 2021. Meanwhile, the USD has weakened against SGD this year by about 6.1%.
The compounded average growth rate for the STI in the last 20 years was 3.0%. The average dividend yield during the same period was 4%, giving total return of 7.0% – a decent rate of return for the past 20 years.
Global tariffs and geopolitical tensions
In the past few months, the volatile Middle East situation and trade tariffs have rose and ebbed, capturing the dynamic and fluctuating global developments and changes. These have added uncertainty to the investment climate and created both opportunities and challenges. While certain countries are more impacted than others, Singapore has been comparatively less impacted versus the rest of the world. Nevertheless, higher tariff rates for regional countries will still have some spillover effects on certain Singapore companies. However, there is a need to distinguish between noises and signals.
Equity market reforms and initiatives
The Equities Market Review Group provided a progress update recently: an initial tranche of SGD1.1b will be placed with three asset managers under the SGD5b Equity Market Development Program (EQDP), and the Monetary Authority of Singapore (MAS) will appoint more asset managers in the second tranche by 4Q25. Additionally, MAS will also provide SGD50m under the Grant for Equity Markets (GEMS) schedule to strengthen equity research and listing support. We expect quality small/mid-cap stocks, as well as S-REITs, to be potential beneficiaries of these developments. A key risk, in our view, is investor overcrowding in certain small/mid-cap names; if liquidity cannot be maintained over the longer term, especially after funds are fully deployed, small/mid-cap counters trading at frothy valuations without supportive underlying fundamentals could be at risk of sharp drawdowns or profit-taking activity.
Financials
Singapore banks have used structural hedging on their loans books to mitigate the pressure that US Federal Reserve (Fed) rate cuts may place on net interest margins (NIM). Falling interest rates will also help to alleviate asset quality concerns on the banking sector, which plays a pivotal role and accounts for almost 50% of the market capitalisation of the STI.
While rates are generally expected to be lower in 2025 than in 2023-2024, which led to concerns about NIM compression, it is worth noting that pre-Covid interest rates were significantly lower and lower NIM margins are generally expected and already priced in earnings projections.
S-REITs
The S-REITs sector has delivered relatively lacklustre returns in recent years, with total returns for the FTSE ST All-Share REIT Index (FSTREI) coming in at -10.7%, +6.5% and -6.2% in 2022, 2023 and 2024 respectively. In contrast, the STI recorded positive total returns in all of those years. Barring any material deterioration in the macroeconomic environment, we believe the S-REITs sector’s drab performance is set to reverse in 2025.
Exhibit 2: Historical trend between FSTREI and Singapore 10Y government yield (inverted)
Source: Bloomberg, internal estimates, as at 29 July 2025
We expect an inflection in distribution per unit (DPU) growth for the S-REITs under our coverage. Some REIT managers have started to guide for improving average debt costs, and continued positive rental reversions (with the exception of some overseas markets such as China) albeit at a moderated pace which will help to reverse DPU growth from negative territory for the current financial year (FY1) to positive territory for the next financial year (FY2), based on our forecasts.
Our preference of the major sub-sectors from most preferred to least preferred is (i) retail, (ii) logistics and industrial (data centres are most preferred within this segment), (iii) office and
(iv) hospitality. We recommend a continued selective stock-picking approach focusing on quality as S-REITs are not immune to the vagaries of the macroeconomic landscape.
Developers/real estate investment managers (REIM)
The Singapore residential market has demonstrated notable resilience in price performance. The URA Private Residential Property Price Index (PPI) appreciated 1.8% in 1H25 as compared to end-2024. We forecast private residential property price growth of +2% to +4% in 2025, underpinned by a more favourable interest rate environment, less pessimism on the global economy, higher launch prices of new projects with decent sell-through rates and strong household balance sheets.
We believe property cooling measures remain a key risk. The latest tightening measures came in early July 2025, when the Singapore Government announced the extension of holding period from three years to four years for the payment of Seller’s Stamp Duty (SSD), and raised the SSD rates by 4 percentage points (ppt) for each tier of the holding period. Hence, besides the property development business, developers have also been diversifying their income streams by growing their investment properties portfolio.
REIMs are similarly looking to increase their recurring income streams by growing their funds under management (FUM), which will lead to higher fee income and increase their return on equity (ROE). To achieve their goals, capital recycling will be a key focus of the REIM as they look to monetise their assets and redeploy capital into new economy asset classes.
Exhibit 3: Singapore private residential properties price trend
Source: URA
Industrials
Singapore’s Industrials sector has performed well YTD, and we see three themes playing out for the rest of the year.
First, ongoing tariff uncertainty and rapid policy changes are forcing many companies to adopt a “wait and see” approach and to delay business decisions. In our view, companies with strong balance sheets and a healthy order backlog will be better positioned to tide through this period of volatility. We continue to adopt a cautious stance as a deeper growth slowdown is still very much on the cards for the rest of the year, in our view.
Secondly, defence is likely to remain in vogue given rising geopolitical tensions and President Trump’s use of defence spending as a tariff negotiations tool.
Finally, ongoing market reforms, including the EQDP, may drive a renaissance of small/mid-cap names, a number of which sit within the Industrials sector.
Consumer
According to Singapore Department of Statistics, Singapore retail sales increased 1.4% year-on-year (YoY) in May 2025, continuing the 0.2% growth in April 2025. Retail sales of supermarkets and hypermarkets grew 7.2% YoY or 4.1% month-on-month (MoM) in May 2025, which we believe was largely driven by the distribution of the second tranche of CDC voucher (SGD500) in 2025. Singapore citizens are also entitled to an additional SGD600 or SGD800 CDC vouchers depending on his/her age in 2025 under the SG60 Package to celebrate Singapore’s 60th anniversary of independence.
Conclusion
Singapore equities allow the investor to gain exposure to a healthy economy known for its strong governance, political stability and robust financial regulations. Singapore equities provide geographic diversification, and relative defensiveness during times of uncertainties and this will help to reduce overall portfolio risks. The attractive dividend yields are appealing to income-focused investors, while discerning investors could discover growth opportunities. Exposure to the Singapore dollar (SGD) through Singapore equities adds a currency diversification benefit which could hedge against volatility in other currencies.
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