SINGAPORE’S Straits Times Index (STI) has broken through to a new record high on Monday (Feb 10).
The index traded as high as 3,912.38 just after the open. Its last record was 3,906.16 on Oct 10, 2007. DBS hit a fresh record, crossing S$46 for the first time. UOB traded as high as S$38 – it last hit a high of S$37.80 in early January. OCBC was also at a new high of S$17.60.
The performance continues from last year’s standout pace, as the benchmark index gained nearly 17 per cent returns to a 17-year high, placing the Republic among the top performers in the region.
DBS reported full-year net profit that was a new record high of S$11.29 billion, up 12 per cent from the year-ago period. It posted net profit for the fourth quarter that was 11 per cent higher compared with the year-ago period
UOB and OCBC are set to report earnings later in February.
The three banks, which contribute to approximately half of the STI – 54 per cent, have hit highs multiple times in the past year.
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Analysts are optimistic on their earnings growth in 2025, given higher-for-longer rates a Trump administration. They also view the bank sector as a beneficiary of global market uncertainties and rising geopolitical tensions.
Geoff Howie, market strategist at SGX, told the Business Times that the banks were a key contributing factor to the STI’s leap forward, having jumped from 40 per cent as a proportion of the STI in 2019, to 54 per cent currently.
Howie added gains have been led, in order by magnitude of gains, by Yangzijiang Shipbuilding, SGX, Singtel, Hong Kong Land, DBS, UOB, OCBC, SATS, ST Engineering and Seatrium.
He pointed out that the recent 10-month charge towards the 17-year high has been accompanied by an above-trend 4% GDP growth rate.
“Growth is a lifeblood of revenue for our companies, and those 10 months you saw Singapore GDP around 4 per cent,” he said, noting that Singapore also had a very strong GDP print just right before the last record high for the STI in 2007.
“It relates to the importance of how a steady growth outlook is important. So stable growth outlook, moderating inflation, as well as global uncertainties are the three cues that will determine whether we reach that 12-month target of around 4.200 (for the STI),” he said, referring to the Wall Street consensus 12-month estimate for the index.
In a note on Monday, DBS was, however, not as optimistic on the STI, with a forecast of 3,950 by the year end.
“The STI Index is likely to trend sideways as tariffs uncertainties return, following a strong 6.3 per cent rise since the US Presidential election,” the bank’s analysts wrote.
“The upcoming Singapore Budget 2025 as well as the latest General Election developments should have limited impact on stocks,” they added.
