Singapore outperforms global equity markets with 13% YtD gain

Morgan Stanley raised its 12-month price target for the MSCI Singapore Index to 2,150.

Singapore’s equity market is increasingly seen as a global safe haven, outperforming major benchmarks and drawing strong investor interest amidst ongoing geopolitical and economic uncertainty.

According to Morgan Stanley’s Mid-Year Singapore Equity Strategy Outlook, the MSCI Singapore Index has returned 13% YtD, more than double the 6% gain of the MSCI All-Country World Index (ACWI).

“Singapore is shaping up as a rare safe haven in global equity markets,” analysts wrote, citing the country’s macroeconomic stability, high dividend yields, and a defensive sector composition anchored in financials, telecoms, and utilities.

Morgan Stanley raised its 12-month price target for the MSCI Singapore Index to 2,150, suggesting a 13% upside and a 17% total return when including dividends.

The bank believes Singapore offers a unique opportunity for investors to preserve capital while participating in market reform-driven growth.

“Amid trade volatility and policy uncertainty globally, Singapore stands out as a market where investors can rotate for safety without sacrificing yield or reform potential,” the report stated.

Beyond safe-haven appeal, Morgan Stanley pointed to structural reforms as a key upside driver. The Monetary Authority of Singapore (MAS) is injecting $5b into Singapore-focused actively managed funds as part of its Equity Market Development Programme.

Additionally, new rules for family offices applying for permanent residency in Singapore require a minimum investment of $50m in SGX-listed equities.

“We estimate that the new PR-linked investment requirement could channel S$500 million/year into SGX-listed stocks, providing a recurring source of demand,” the bank noted.

A second reform wave, expected later this year, may include a “Value-Up” initiative aimed at narrowing Singapore’s valuation discount relative to global peers.

“Singapore trades at a ~20% P/E discount to MSCI World despite stronger profitability,” the report observed. Morgan Stanley expects new policies to encourage companies to disclose return-on-equity (ROE) targets, engage shareholders more actively, and possibly benefit from listing fee waivers, tax incentives, or index inclusion bonuses.

Whilst Singapore’s GDP growth is forecast to slow to 1.4% in 2025 from 4.4% in 2024 due to weaker global trade and investment, the report remains optimistic. Interest rates are expected to stay elevated this year before easing in 2026.

A projected 5% depreciation in the USD/SGD exchange rate by the end of 2026 could further enhance the appeal of SGD-denominated assets.

Morgan Stanley’s top equity picks in Singapore include Singapore Exchange (SGX), UOB, Singtel, Sea Ltd, and CapitaLand Investment.

The bank favours the Financials and Communications Services sectors and believes small- and mid-cap stocks stand to benefit most from reforms and possible new index creations.

However, risks remain. “The speed and scale of reform implementation remain a key uncertainty,” the analysts cautioned.