Now Reading: Singapore Stocks Hit Records on Growth and Bank Rally
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Singapore Stocks Hit Records on Growth and Bank Rally
Singapore’s benchmark Straits Times Index has risen 23% this year, reaching repeated records and heading for a fifth consecutive quarter of gains. Technology exports, productivity gains and contained inflation have supported earnings,…
The Story in Brief
Singapore’s benchmark Straits Times Index has risen 23% this year, reaching repeated records and heading for a fifth consecutive quarter of gains. Technology exports, productivity gains and contained inflation have supported earnings, while the Singapore dollar has strengthened nearly 6% against the US dollar in three years.
DBS, OCBC and UOB have led the advance, accounting for nearly 60% of the index’s market value. JPMorgan has set a 6,500 target, about 13% above the index’s latest close of 5,743.59. But Fidelity International says valuations have outpaced earnings growth. The index trades above 16 times 12-month forward earnings, more than two standard deviations above its 10-year average.
The Indian Opinion
The easy story is that Singapore has become a flawless safe haven, while the bearish story calls the rally an inevitable bubble. Both overlook the concentration risk. Three banks now drive nearly 60% of the benchmark, so the index is not a clean measure of the wider economy. The useful test is whether earnings growth catches up with prices, particularly if global rates or bank profits weaken. Will the 6,500 target be supported by earnings, or mainly by rerating?
Source: livemint.com
This story was synthesised by AI from the source linked above.
