Tariffs, heightening tensions between the United States and China, and recently the conflict in the Persian Gulf. This string of events happening since the beginning of 2025 had rocked markets worldwide from a geopolitical perspective, sending volatility to major markets. Yet, quietly, for Singapore’s Straits Times Index (STI), it rose around 30.18% from 1 Jan 2025 till now (20 Mar 2026), higher than the United States’ S&P500 (9.49%), China’s CSI300 (20.98%) and Europe’s STOXX50 (12.93%), with Japan’s N225 (33.78%) performing slightly better.
(Picture credit: aKasakow from pixabay.com)
There were a few factors, direct and indirect, contributing to STI’s rise, along with some other equity counters; the news of global capital inflows into our tiny little island, the launch of the Equity Market Development Programme (EQDP) by the government, and reputation of being a safe and neutral haven, were some of them. A few days ago, the STI went back above the 5,000-point mark since Feb 2026, before settling below it just a couple of days later.
Historically since the last peak experienced prior to the Global Financial Crisis (GFC) in Oct 2007 and the subsequent recovery two years later, the STI had been hovering between the ranges of 2,500 and 3,500 points for a period of a decade and a half before the climb happening near the end of 2024. It was during this period that some investors had labelled the STI as going sideways with no direction, with worse descriptions being given to it. The tune now is different, with analysts predicting a 6,500-point level within the next nine months or so1, a very bull case for our local stock market as a rising tide (of the STI) would be raising all boats (other counters).
Every dog would have its day, as the saying goes. Markets go in cycles, bust and boom, with probably different regions/countries having different peak-trough-peak wavelengths (e.g., Japan’s versus the United States’ markets). Hence, the past couple of years, and possibly at least the next half decade or so, we are seeing some growth in our local equities market, which in the past were regarded only as a “dividend farm”.
However, looking from the flip side of things, Singapore is still a country that relies on trade (imports and exports) and external resources to fully function, traits that are vulnerable and could cause challenges and a reversal of recent fortunes experienced by our locally listed companies. We are still a small market after all, unable to influence much in the whole global equity game: the total market capitalization of all the 30 companies in the STI stood closely to Palantir, just one company, at around SGD 461 billion or so2. Bringing up to a larger scale, STI just represented around slightly less than 10% of Alphabet’s3.
The Bedokian’s Take
Going back to the basics of investing as per The Bedokian Portfolio’s methodology, geographical diversification via regions/countries is the next degree lower to that of diversification of asset classes, as explained that different places would have different market and economic conditions at a given time. Granted that most local investors had benefited from the recent STI bull run due to the heavy home bias, it does pay well (pun intended) by having a part of the portfolio in foreign equities, as based on past data, returns did surpass the STI’s depending on the timeframe viewed.
Disclosure
The Bedokian is vested in the STI via the Amova Singapore STI ETF, the S&P 500 via the SPY ETF and Alphabet.
Related post
Is The Straits Times Index That Bad In Performance?
All data is obtained and calculated from Yahoo Finance unless otherwise stated.
1 – Soh, Terese. STI could hit as high as 6,500 on extended rally, says JPMorgan, giving its top picks. 29 Jan 2026. https://www.businesstimes.com.sg/companies-markets/capital-markets-currencies/sti-could-hit-high-6500-extended-rally-says-jpmorgan-giving-its-top-picks (accessed 21 Mar 2026)
2 – FTSE Russell Factsheet. Straits Times Index (STI). 27 Feb 2026. https://research.ftserussell.com/Analytics/FactSheets/Home/DownloadSingleIssue?issueName=STI&isManual=False (accessed 21 Mar 2026)
3 – Companiesmarketcap.com (accessed 21 Mar 2026)
No comments:
Post a Comment