Singapore Market Strategy: Navigating Uncertainty Amid Regional Conflict and Capital Preservation Focus April 24, 2026

Market Performance Review

Singapore equities concluded a remarkable ten consecutive months of gains with a 2.2% decline in March, though the first quarter of 2026 still delivered a positive 5.1% return. The market reached all-time highs on 23rd February before the Iran war drove significant sector rotation, boosting performance in defence spending, biofuels, and capital markets.

Banks demonstrated resilience, maintaining gains even during March’s decline and outperforming throughout the quarter with their stable dividend yields. However, REITs faced substantial pressure as interest rate expectations shifted from anticipated cuts to potential rate hikes. Consumer segments also weakened as rising inflation compressed disposable income.

Strategic Outlook: Capital Preservation in Volatile Times

Phillip Securities Research adopts a cautious stance, emphasising capital preservation over prediction in the current uncertain environment. Equities have transformed into volatile, leveraged instruments tied to oil price movements. The closure of the Straits of Hormuz presents dual risks: driving higher energy prices and inflation whilst threatening global production through material shortages.

The current conflict’s impact could exceed previous disruptions. Unlike pandemic-era bottlenecks affecting vessel availability, the present situation threatens feedstock and raw material supplies. Singapore has already experienced force majeures at chemical facilities, affecting industries from plastics to pharmaceuticals. Historical precedent suggests oil prices could reach US$200 per barrel, based on the Kuwait war pattern when crude oil surged 275% from US$15 to US$42.

Investment Recommendations: Capitalising on Capex Cycles

Despite geopolitical uncertainties, Phillip Securities Research identifies opportunities within expanding global capital expenditure cycles. Key sectors include data centres, with hyperscalers increasing AI and data centre capex by approximately 60% in 2026. Singapore’s recent 200MW data centre application request in Jurong reflects this trend.

The semiconductor sector benefits from AI and memory chip demand driving foundry capacity expansion. Defence spending increases as countries prioritise domestic military capabilities, whilst renewable energy gains importance for energy security. Singapore’s construction sector enjoys multi-year demand growth.

Primary beneficiaries include IT service companies like Telechoice, bidding for regional data centre projects, and Frencken, positioned to benefit from semiconductor equipment demand. Oiltek targets sustainable aviation fuel opportunities. Conversely, REITs face near-term underweight recommendations due to stagflationary pressures affecting rents, interest expenses, and valuations.

Singapore’s macro fundamentals remain robust, with semiconductor exports surging 51% in February and loan growth reaching 6.3%, the fastest in over four years. Building materials demand shows strength with ready-mixed concrete up 47% year-on-year.

Frequently Asked Questions

Q: What caused Singapore equities to decline in March 2026?

A: Singapore equities fell 2.2% in March, ending ten consecutive months of gains, primarily due to the Iran war’s impact on global markets and sector rotation towards defence, biofuels, and capital markets.

Q: How are Singapore banks performing compared to other sectors?

A: Banks demonstrated resilience by maintaining gains even during March’s market decline and outperformed throughout the quarter, supported by their stable dividend yields.

Q: What is Phillip Securities Research’s investment strategy recommendation?

A: The research house advocates for capital preservation over prediction, emphasising that equities have become volatile instruments tied to oil price movements, making cautious positioning essential.

Q: Which sectors are expected to benefit from current global developments?

A: Key beneficiary sectors include data centres, semiconductors, defence, renewable energy, and construction, all driven by expanding global capital expenditure cycles accelerated by geopolitical tensions.

Q: What are the risks to oil prices from the current conflict?

A: Oil prices could potentially reach US$200 per barrel based on historical precedent from the Kuwait war, when crude oil surged 275% from US$15 to US$42 due to supply disruptions.

Q: How is Singapore’s domestic economy performing?

A: Singapore shows strong macro fundamentals with semiconductor exports up 51% in February, loan growth at 6.3% (fastest in four years), and building materials demand surging with concrete up 47% year-on-year.

Q: Which specific companies are positioned to benefit from current trends?

A: Telechoice is bidding for regional data centre projects, Frencken will benefit from semiconductor equipment demand, and Oiltek is targeting sustainable aviation fuel opportunities.

Q: Why are REITs facing pressure in the current environment?

A: REITs are experiencing headwinds due to shifting interest rate expectations from cuts to potential hikes, creating a stagflationary environment that pressures rents, increases interest expenses, and compresses valuations.

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