Equities eye 2026 bull run after 22.7% STI surge

UOB Kay Hian identifies sustained momentum following record outperformance in 2025.

Singapore's equity market is expected to remain bullish in 2026, following a 22.7% rise in the Straits Times Index (STI) in 2025, according to a UOB Kay Hian report.

The market’s outperformance is expected to be supported by policy tailwinds for equities from the deployment of the first tranche of funds under the Equity Market Development Programme, with a second tranche expected.

Key drivers also include the initial public offering market’s revival and broader investor focus on mid-cap stocks following the launch of the Singapore Next 50 Index.

A recent Investment Management Association of Singapore survey also revealed that 90% of fund managers expect STI to strengthen or remain stable, bolstered by resilient corporate earnings, robust dividend yields, and government initiatives aimed at revitalizing the equity ecosystem

Regarding currency, 46% of respondents anticipate the USD/SGD pair to weaken by 5% to 10%, whilst 39% expect the exchange rate to remain stable, the survey said. 

Meanwhile, Singapore's macroeconomic environment remained resilient in 2025, UOB added.

This was supported by a rebound in growth in the fourth quarter, cooling inflation, a firm labour market, steady domestic demand, and a mild appreciation of the Singapore dollar against the US dollar.

"When assessing threats to Singapore’s asset management industry over the next 12 months, managers continue to point to the rise of passive solutions and ongoing margin erosion as primary concerns," the IMAS survey said. 

'However, 2026 marks the emergence of a new anxiety: the fear that the strong market performance of 2025 may be unsustainable. This suggests a heightened sensitivity to market durability alongside long-standing structural challenges," it added.