Singapore Market Outlook 2026: Phillip Securities Forecast January 9, 2026

Record-Breaking 2025 Performance Sets Stage for Continued Growth

Singapore’s equity market delivered exceptional returns in 2025, registering its highest gains in 16 years with a remarkable 22.7% increase, significantly outperforming the previous year’s 16.9% gain. This outstanding performance has positioned the market favourably as investors look toward 2026 opportunities.

Favourable Market Conditions Create Investment Opportunities

Phillip Securities Research views 2026 as a particularly fertile environment for Singapore equities, supported by several key structural factors. Interest rates have declined to 1.20%, marking their lowest levels in three and a half years, creating more attractive conditions for equity investments. Additionally, the deployment of Singapore’s S$5 billion Equity Development Programme (EQDP) is expected to generate an unprecedented liquidity premium specifically benefitting small and mid-cap stocks in the local market.

Three Major Investment Themes Drive 2026 Strategy

The research house identifies three primary themes that will shape Singapore’s equity landscape in 2026. First, asset monetisation strategies are anticipated to generate stronger investment gains, with particular focus on major corporations including Singtel, Keppel, and Sembcorp Industries. These companies are positioned to unlock value through strategic asset optimisation initiatives.

Secondly, the low interest rate environment creates benefits equities by making them more attractive relative to fixed-income alternatives while simultaneously reducing borrowing costs for companies. This environment is expected to particularly benefit Real Estate Investment Trusts (REITs) through enhanced dividend growth prospects.

Third, a capital expenditure-driven earnings cycle is emerging across multiple industries. This cycle encompasses significant investments in artificial intelligence infrastructure, renewable energy projects, and domestic capital expenditure programmes. The healthcare sector presents additional opportunities through potential drug commercialisation and infrastructure development that could lead to a sector re-rating.

Market Positioning and Outlook

The convergence of these factors – record market performance, favourable monetary conditions, substantial government liquidity support, and multiple growth themes – creates a compelling investment case for Singapore equities. The research suggests that 2026 will benefit from this unique combination of supportive elements, positioning the market for continued strong performance across various sectors and market capitalisations.

Frequently Asked Questions

Q: How did Singapore equities perform in 2025?
A: Singapore equities registered their highest gains in 16 years, with the market rising 22.7% in 2025, compared to 16.9% in 2024.

Q: What makes 2026 favourable for Singapore equities?
A: Three key factors create a fertile environment: interest rates at 3½-year lows of 1.20%, deployment of the S$5 billion EQDP creating liquidity premiums for small and mid-cap stocks, and multiple investment themes supporting the market.

Q: What are the three major investment themes for 2026?
A: The themes are asset monetisation (particularly from Singtel, Keppel, and Sembcorp Industries), low interest rates benefitting equities and REITs, and a capex-driven earnings cycle across AI, renewable energy, and domestic investments.

Q: Which sectors are expected to benefit from the capex cycle?
A: Multiple industries will benefit from AI investments, renewable energy projects, and domestic capex. Healthcare specifically could see re-rating through potential drug commercialisation and infrastructure development.

Q: How will low interest rates impact different asset classes?
A: Low interest rates make equities more attractive compared to other investments while reducing borrowing costs for companies and supporting dividend growth, particularly benefiting REITs.

Q: What is the S$5 billion EQDP and how does it affect the market?
A: The Equity Development Programme (EQDP) is a S$5 billion initiative whose deployment will create an unprecedented liquidity premium specifically for Singapore small and mid-cap stocks.

Q: Which specific companies are highlighted for asset monetisation opportunities?
A: Phillip Securities Research specifically identifies Singtel, Keppel, and Sembcorp Industries as companies positioned to outperform through asset monetisation strategies.

This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.

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