Singapore’s growth can propel earnings strength and its equities: Fullerton Fund Management
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Singapore’s stock market is undergoing a structural shift.
PHOTO: ST FILE
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SINGAPORE - Singapore equities are staging a broad-based rally fuelled by strong economic growth, bold market reforms and ambitious new tax incentives, and this is propelling the market into a new phase of outperformance.
The Straits Times Index (STI) – which tracks the performance of the top 30 largest and most liquid companies listed on the Singapore Exchange (SGX) – hit record highs in 2025.
Compared with a year ago, it has risen more than 20 per cent. This is on top of a more than 20 per cent gain in 2024.
Mr Robert St Clair, head of investment strategy at Fullerton Fund Management, told The Straits Times he is optimistic that Singapore stocks have even more room to run, despite the global trade uncertainty.
He believes that Singapore’s macro performance can trigger sustainably stronger earnings performance than investors appreciate.
Looking ahead, he expects the Singapore market to deliver earnings growth closer to 10 per cent in 2026 and the year after, more than the market expectation of 6 per cent currently.
Mr St Clair said Prime Minister Lawrence Wong’s announcement in Budget 2025
The Government has committed $5 billion to a new Equity Market Development Programme
Fullerton Fund Management is among the initial three asset managers given $1.1 billion by the Monetary Authority of Singapore to launch the strategy.
The Temasek-backed asset manager will be launching the Fullerton Singapore Value-Up unit trust – which is 100 per cent invested in SGX-listed equity instruments – by the fourth quarter.
Mr St Clair said: “This time, the stars are quite aligned. We have a very favourable global backdrop and the domestic economy in Singapore is very strong. So your external players and local players are benefiting well.”
The STI is already pricing in a significant re-rating as it adjusts to this potentially higher profitability paradigm, he added.
Realised earnings in 2025 are already surprising on the upside.
Mr St Clair said Singapore’s earnings growth should continue to improve because of very low cost pressures – reflecting productivity gains and low inflation – and higher revenues over time as the Republic benefits from the global demand for high value-added outputs.
A striking feature of this cycle is how broad-based the rally has been.
Mid-caps are tracking large caps, reflecting recovery across virtually every sector.
Singapore’s equities reform is widening this breadth by pushing companies, regardless of size, towards higher-quality earnings, innovation and value chain progression.
That sets a structural, not just cyclical, foundation for growth, Mr St Clair said.
He noted that the earnings drivers differ by market tier.
Large caps, especially in communications, industrials and financials, earn roughly half their revenue domestically and half abroad.
Small and mid-caps are more locally anchored, concentrated in real estate and consumer spending, where tourism demand is a key tailwind.
The alignment of global factors and domestic strength means both external-facing and local players are thriving. And this is boosting the market.
Mr St Clair said the market’s sharp rebound began before new policy measures kicked in, suggesting “smart money” called the upturn ahead of consensus.
Industrials, which performed strongly in 2024, are continuing to do so in 2025 amid a construction boom and so far resilient export numbers.
The equity market is now less correlated with developed market cycles, aided by the Singapore dollar’s persistent strength, high dividend payout ratios and robust foreign inflows.
Investors have poured money into the Singapore story on artificial intelligence (AI), biomedical and clean energy – the same areas the Government is boosting spending on, said Mr St Clair.
But just because there is a lack of such companies listed on the SGX does not mean investors here are missing out.
“Singapore’s AI story is feeding through the industrial stocks as it lowers the cost of production and improves efficiency across sectors,” he said.
“AI can affect productivity in the industrial sector as well as finance, communications and healthcare, especially in biomedical,” he added.
A key risk to watch for is that with all the liquidity rushing in, especially into small- and mid-cap stocks, exuberance does not outpace fundamentals, he said.
