Singapore marks its 61st National Day with strong equity and currency momentum, but sustaining the rally will depend on bank earnings, dividend resilience, policy support and continued economic strength.
Key takeaways
- Singapore equities remain supported by bank earnings, dividend strength and market reforms, but higher valuations may limit further rerating.
- MAS’s exchange-rate policy and Singapore’s strong external balance continue to underpin a resilient Singapore dollar.
- Technically, the Singapore 30 remains in a major uptrend, while USD/SGD signals potential renewed downside momentum.
Singapore’s Straits Times Index (STI) has climbed by approximately 152% from its pandemic closing low of 2,233.48 in March 2020 to 5,628.50 on 31 July 2026.
Over the same period, the Singapore dollar appreciated by around 13.6% against the US dollar, recovering from US$0.6864 per Singapore dollar to approximately US$0.7797 (see Fig 1).
Fig. 1: Straits Time Index & SGD/USD cumulative returns since Mar 2020 to 31 Jul 2026 (Source: Business Times, ExchangeRates.org.uk, Yahoo Finance & Reuters). The information presented is historical information, and past performance is not indicative of fu
Ahead of Singapore’s 61st National Day on 9 August, both assets are entering the celebration from a position of strength.
However, this is no longer simply a post-pandemic recovery. Singapore equities have been re-rated by bank earnings, dividends and market-reform measures, while the SGD remains anchored by exchange-rate policy credibility and Singapore’s external balance-sheet strength.
The risk for traders is that much of this good news is now reflected in valuations.
From pandemic shock to record territory
The STI closed at 5,628.50 on 31 July after gaining 8.8% during the month, its strongest monthly advance since November 2020. 1
It reached a record closing high of 5,713.19 on 29 July, extending its 2026 gain to approximately 21%. 2
Singapore’s US-dollar equity gross return (including reinvested dividends before withholding tax) has been equally strong. MSCI Singapore gained 20.18% during the first seven months of 2026 and 29.64% over the 12 months to 31 July, outperforming the MSCI World Index’s respective returns of 10.52% and 20.88%. 3
Banks, income and reform powered the re-rating
Singapore’s banking concentration has been its biggest advantage. Financials represented 62.51% of MSCI Singapore at the end of July, while DBS, OCBC and UOB collectively accounted for 58.66%. 3
The three banks benefited from the post-pandemic rise in interest rates, resilient asset quality, regional wealth inflows and surplus capital available for dividends and buybacks.
The same concentration is now a key vulnerability. Lower net interest margins, slower loan growth or deteriorating credit quality would have an outsized impact on index earnings. Singapore is therefore a defensive equity market, but it is not a diversified one.
Income remains an important support. MSCI Singapore offered a dividend yield of 2.96% on 31 July, the highest among Singapore, China, Japan and South Korea. This headline yield has fallen from 3.25% in June because share prices rose faster than dividends during July. 3 4 5 6
“Constant dividend payout” is not a standard metric published in MSCI’s country factsheets. Dividend consistency is better assessed through payout policies, free cash flow stability, and sector composition.
Singapore scores relatively well because banks, telecommunications companies, REITs, and established industrial groups make up a large share of its market.
Nevertheless, a stable historical payout cannot guarantee future dividends, particularly if bank profitability or property cash flows weaken.
Government policy has reinforced the re-rating. Singapore’s S$6.5 billion Equity Market Development Programme (EQDP) is directing institutional capital towards locally listed companies.
By February 2026, MAS had allocated S$3.95 billion across nine managers and announced an expansion aimed partly at broadening participation beyond the largest stocks. 7
These measures cannot manufacture earnings. They can, however, improve liquidity, research coverage and price discovery while encouraging undervalued companies to unlock capital through dividends, buybacks, restructurings or asset sales.
Singapore versus China, Japan and South Korea
| MSCI Index | YTD return | 12-month return | Dividend yield | Trailing P/E | Forward P/E | P/B |
|---|---|---|---|---|---|---|
| Singapore | 20.18% | 29.64% | 2.96% | 20.37x | 17.71x | 2.33x |
| China | −7.22% | −0.98% | 2.26% | 14.09x | 10.97x | 1.47x |
| Japan | 17.16% | 32.73% | 1.78% | 20.95x | 16.37x | 2.01x |
| South Korea | 81.47% | 150.75% | 0.83% | 17.16x | 5.27x | 2.59x |
Fig. 2: Key performance statistics & valuation metrics of MSCI Singapore, China, Japan & South Korea as of 31 Jul 2026 (Source: MSCI country-index factsheets). The information presented is historical information, and past performance is not indicative of future performance.
China is the cheapest market on trailing earnings and price-to-book, but its discount reflects weak momentum and persistent uncertainty over domestic demand, property-sector stress, and policy transmission.
Its 9.04% rebound in July narrowed the 2026 year-to-date loss to 7.22%, but the 12-month return remained marginally negative at −0.98%. 4
Japan offers the closest alternative to Singapore in terms of reform credibility and market quality.
MSCI Japan advanced by 17.16% year-to-date and 32.73% over 12 months, supported by corporate governance reforms, improved capital efficiency, and nominal earnings growth. Its forward P/E of 16.37 was slightly below Singapore’s 17.71, although its 1.78% dividend yield was substantially lower. 5
South Korea was the clear momentum leader, rising 81.47% year-to-date and 150.75% over 12 months, despite a 17.11% decline in July. Its forward P/E of just 5.27 looks exceptionally cheap, but that figure depends on significant earnings upgrades.
Concentration risk is severe. Information technology represented 70.36% of MSCI Korea, while Samsung Electronics and SK Hynix alone accounted for 62.83%.
South Korea, therefore, offers the strongest earnings momentum, but also the greatest downside exposure to a reversal in AI-memory pricing or global technology capital expenditure. 6
Singapore occupies the middle ground: less earnings acceleration than South Korea, less deep-value optionality than China and narrower sector exposure than Japan, but higher income and a more stable currency framework.
The Singapore-dollar anchor
Singapore conducts monetary policy through the exchange rate rather than a domestic policy interest rate.
The Monetary Authority of Singapore (MAS) manages the Singapore dollar against a trade-weighted basket within the S$NEER policy band, adjusting its slope, midpoint or width to preserve medium-term price stability. 8
Following the pandemic shock, MAS flattened the band in March 2020. It subsequently tightened policy five times from October 2021 as imported inflation intensified, before easing the pace of appreciation in 2025.
On 27 July 2026, MAS slightly increased the band’s appreciation rate again, while leaving its width and midpoint unchanged. The decision reflected renewed inflation risks and provided a fresh policy tailwind for the SGD. 9
However, an appreciating S$NEER path does not guarantee that USD/SGD will decline continuously, as it also responds to US Federal Reserve policy, US Treasury yields, energy prices and global risk aversion.
Let’s now unpack the Singapore stock market and the Singapore dollar from a technical analysis perspective along the longer-term multi-month horizon.
Singapore 30 – Overbought, but major uptrend remains intact
Fig. 3: Singapore 30 long-term secular trend as of 6 Aug 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
The Singapore 30 (a proxy for the MSCI Singapore futures) has staged a major bullish breakout in the week of 12 May 2025, and price action has since oscillated within a major ascending channel since the 5 August 2024 low of 281.46 (see Fig. 3).
The weekly RSI momentum indicator has trended higher into its overbought zone but has not yet signalled a bearish divergence condition.
These observations suggest that a corrective pullback may occur within its ongoing major uptrend towards the 50-day moving average, which serves as medium-term support around 488.22.
Watch the 469.30 key long-term pivotal support (also the 200-day moving average) to maintain the major uptrend for the next major resistances to come in at 553.70 and 583.90/596.17 (Fibonacci extension cluster).
On the other hand, a bearish break and a weekly close below 469.30 would damage the major uptrend, triggering a potential multi-month corrective decline sequence that exposes the next major supports at 426.70 and 398.85.
USD/SGD – Resurgence of potential USD downside momentum
Fig. 4: USD/SGD long-term secular trend as of 6 Aug 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
The USD/SGD has continued to oscillate within a multi-year descending channel since the 2 February 2023 low, suggesting that the long-term secular downtrend remains intact.
The recent 6-month rebound of 3.2% in USD/SGD from the 28 January 2026 low to the 24 June 2026 high may have run its course, as price action has broken down below the 50- and 200-day moving averages (see Fig. 4).
In addition, the weekly RSI momentum indicator has broken below a key ascending support level, suggesting a potential revival of downside momentum.
Hence, USD/SGD may resume a multi-month bearish impulsive down move sequence within its long-term secular downtrend.
Watch the 1.3085 key long-term pivotal resistance, and a break below the 1.2765 intermediate support would expose the major supports at 1.2580 and 1.2450 (also a Fibonacci extension cluster).
However, a clearance and a weekly close above 1.3085 would invalidate the bearish scenario on USD/SGD, opening the door to a potential USD revival, with the next major resistances at 1.3300 and 1.3515.
Wrapping it up
The potential main swing factors are bank earnings, dividend sustainability, EQDP-driven liquidity, semiconductor demand, energy prices and the next MAS review.
Singapore enters its 61st year of independence with strong momentum in equity and currency markets. Extending that outperformance will now likely require earnings delivery, not another valuation re-rating alone. Majulah Singapura.
Footnotes
2 https://finance.yahoo.com/quote/%5ESTI/history
3 https://www.msci.com/documents/10199/255599/msci-singapore-index.pdf
4 https://www.msci.com/documents/10199/255599/msci-china-index.pdf
5 https://www.msci.com/documents/10199/255599/msci-japan-index.pdf
6 https://www.msci.com/documents/10199/255599/msci-korea-index.pdf
8 https://www.mas.gov.sg/monetary-policy/singapores-monetary-policy-framework/faqs/section-2
9 https://www.mas.gov.sg/news/monetary-policy-statements/2026/mas-monetary-policy-statement-27jul26
This article and its contents are intended for educational purposes only and should not be considered trading advice.
