UOBKH forecasts STI 5,400 as $3b 'reboot' hits market

The government allocated $3b to the Financial Sector Development Fund.

Singapore’s 2026 Budget is expected to benefit the country’s financial sector and support enterprise competitiveness, analysts said.

The government will inject $1.5 b into the Financial Sector Development Fund and launch a second b$1.5 b tranche of the Anchor Fund to support fund-raising by high-growth enterprises and attract quality public listings, according to UOB Global Economics and Markets Research’s latest analysis.

“In our view, these initiatives bode well for the Singapore financial sector activities which are expected to benefit SGX,” it said.

UOB said additional measures to support the Singapore stock market over the medium to long term include streamlining listing rules for high-growth firms and expanding the Economic Development Board’s mandate to attract more early-stage companies and multinational corporations.

It also forecast that the Straits Times Index could reach 5,400 by year-end.

The budget, delivered by Prime Minister and Finance Minister Lawrence Wong on 12 February, projects total expenditure of $137.32 b, up 10.3% from 2025, whilst maintaining a budget surplus of $8.5 b, or 1% of gross domestic product (GDP), UOB noted.

RHB Investment Bank said the Budget will continue to enable business competitiveness and enhance Singapore’s economic relevancy, whilst supporting long-term economic transformation efforts.

“Budget FY2026, like past budgets, will continue to enable business competitiveness and enhance Singapore's economic relevancy for tomorrow,” it noted.

UOB described the budget as expansionary and growth-supportive, whilst RHB said it balances immediate relief for households with strategic sector investments to strengthen long-term economic resilience.

To ease living costs, households will receive $500 in Community Development Council vouchers from January 2027, with half allocated for supermarkets and half for heartland merchants.

Additional support includes $200 to $400 one-off Cost-of-Living Special Payments for eligible adults, utility rebates, Child LifeSG credits, and CPF top-ups for seniors.

AI adoption and workforce upskilling are central to the budget. Measures include grants, tax incentives, and an AI park at one-north, along with access to premium AI tools for approved courses.

The government will also establish a National AI Council and national AI missions across advanced manufacturing, connectivity, finance, and healthcare, whilst enhancing SkillsFuture programs, mid-career training allowances, and senior employment schemes.

UOB also noted the budget includes continued investments in defence and cybersecurity, benefitting local companies like ST Engineering.

RHB, meanwhile, highlighted green and sustainability initiatives, including energy transition, decarbonisation, and carbon tax planning, positioning Singapore as a responsible and globally competitive economy.

GDP growth for 2026 is projected at 2% to 4% by UOB and 3% by RHB.