Investor optimism returns to Singapore stocks but doubts persist: report

Investor sentiment toward REITs was notably positive, buoyed by around 100 basis points of rate compression.

Investors are expressing renewed interest in Singapore's equity markets, but questions remain about the sustainability of the country’s productivity gains and the impact of ongoing market reforms, according to Morgan Stanley’s latest post-marketing feedback.

In follow-up meetings after publishing its Singapore at 60 Bluepaper, Morgan Stanley met with 60 institutional investors across Singapore and Hong Kong.

Discussions revealed four major themes: skepticism about long-term productivity trends, mixed views on market reform outcomes, cautious optimism around real estate and infrastructure plays, and selective profit-taking in top-performing stocks.

Investor sentiment toward REITs was notably positive, buoyed by around 100 basis points of rate compression in the Singapore 10-year yield and 3-month SORA year-to-date.

Some are rotating from established leaders like CapitaLand Integrated Commercial Trust toward underperformers such as CapitaLand Ascendas REIT, Starhill Global, NTT DC, and CDL Hospitality Trust.

Meanwhile, enthusiasm around infrastructure-linked names remains intact, with Singtel and Keppel Corp drawing attention.

Whilst some investors have begun taking profit on Singtel after it broke the $4 level, Morgan Stanley analysts maintain that the stock still has room to climb—pending improved return on invested capital, stronger-than-expected earnings, and clear guidance on data center monetization and GPU-as-a-service expansion.

Keppel, on the other hand, continues to benefit from its shift toward a more asset-light, recurring income model. Morgan Stanley estimates this could drive ROE improvement of 200–300 basis points by 2027.

On the macro front, investors are closely watching the effects of de-dollarization and rate divergence between Singapore and Hong Kong, particularly on bank net interest margins for the rest of 2025.

Market reforms aimed at boosting liquidity and new listings also drew debate, with views split on their eventual success.

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