STI Inches Higher Amid Tariff Headwinds and REIT Weakness; Bank Stocks Stay Strong
Market Overview and STI ETF Performance
The Straits Times Index (STI) closed the trading week from 20 July to 24 July 2026 at 5,588.00 points, representing a modest gain of 0.11 per cent on the final day and a weekly advance of 1.62 per cent from the prior week’s close of 5,499.00. The index moved within a relatively narrow range of approximately 100 points over the five sessions, reflecting a tug-of-war between positive momentum in the banking sector and persistent headwinds from the real estate and telecommunications segments. The STI now sits just 7 points below its 52-week high of 5,595.00, a level not seen since the current cycle began. The SPDR STI ETF, which tracks the index directly, ended the week at S$5.663, slightly below its previous close of S$5.67, and remains well within its 52-week range of S$4.23 to S$5.686. For novice investors, the ETF offers a simple way to gain broad exposure to Singapore’s blue-chip equities without having to pick individual stocks.
The market’s performance over the week was uneven. Advancing stocks outnumbered decliners on only two of the five days, and the latest trading session saw 11 gainers against 14 losers, with five counters unchanged. The average daily change across all constituent stocks on the final day was –0.34 per cent, confirming that the STI’s slight rise was driven largely by a handful of heavyweights rather than broad-based strength. Turnover on the final day exceeded S$600 million in the top five stocks alone, led by DBS Group Holdings at around S$205 million, Oversea-Chinese Banking Corporation at S$140.5 million, and Singapore Telecommunications at S$129.4 million. This pattern of concentrated liquidity in a few names is characteristic of a market where conviction is uneven and participants are gravitating toward perceived safety.
Sector-by-Sector Analysis
The sector breakdown from the data reveals a clear divergence between financial services and defensive sectors on one hand, and real estate and technology on the other. The Financial Services sector posted an average daily change of +0.45 per cent on the latest day, bolstered by persistent buying interest in the three local banks – DBS, OCBC, and United Overseas Bank. The Energy sector, represented solely by Seatrium, gained 1.43 per cent, while Consumer Defensive stocks, including Thai Beverage and Wilmar International, rose 0.92 per cent. These sectors benefit from relatively stable earnings and, in the case of banks, rising net interest margins in a high-rate environment.
By contrast, the Real Estate sector suffered an average daily decline of 1.04 per cent. This group comprises 12 constituents, making it the largest sector in the index, and its weakness dragged on the overall market. Within real estate, both property developers and real estate investment trusts (REITs) came under pressure. CapitaLand Integrated Commercial Trust, Keppel DC REIT, and City Developments Limited were among the top five losers on the final day, with declines ranging from 1.61 per cent to 3.09 per cent. The Technology sector, represented by Venture Corporation, fell 1.10 per cent, and Communication Services, represented by Singtel, lost 1.57 per cent. Industrials, a diverse group that includes Singapore Airlines, SATS, and ST Engineering, edged down 0.11 per cent on average.
The weak performance of REITs is particularly noteworthy given the high dividend yields they offer. CapitaLand Ascendas REIT, Mapletree Logistics Trust, and Mapletree Pan Asia Commercial Trust all yield above 6 per cent, yet their share prices continue to languish near 52-week lows. This suggests that income-oriented investors are demanding a higher risk premium to compensate for uncertainty around interest rates, occupancy rates, and distribution growth. The situation is compounded by recent news that merger talks between Temasek-backed CapitaLand Investment and Mapletree have stalled, as reported by The Business Times and The Edge Singapore on 23 July. Such a deal would have reshaped the REIT landscape and potentially unlocked synergies, but its collapse removes a near-term catalyst for the sector.
Top Gainers and Losers Analysis
On the final day of the week, the top five gainers were Seatrium (+1.43 per cent), Thai Beverage (+1.11 per cent), DFI Retail Group (+0.88 per cent), ST Engineering (+0.86 per cent), and Wilmar International (+0.78 per cent). Seatrium continues to benefit from a recovery in offshore and marine activity, which is reinforced by Energy sector strength. Thai Beverage and Wilmar are defensive plays that attract investors seeking stability amid geopolitical uncertainty. ST Engineering, despite being slightly below its 50-day moving average of S$10.80, remains a core holding with a low beta of 0.15, meaning it moves less dramatically than the broader market.
Over the full week, the top gainers were Yangzijiang Shipbuilding (+10.50 per cent), Seatrium (+6.50 per cent), SATS (+3.05 per cent), Hongkong Land (+2.91 per cent), and DBS (+2.84 per cent). Yangzijiang’s surge stands out. The shipbuilder trades at a price-to-earnings multiple of just 9.5 times, making it one of the cheapest stocks in the index on an earnings basis. Its high beta of 0.87 suggests it is more sensitive to market movements, and the weekly rally likely reflects optimism about order book momentum and the broader shipping cycle. For novice investors, such a sharp gain in a short period underscores the potential reward – and risk – of satellite holdings.
On the losing side, the weekly laggards were DFI Retail Group (–4.19 per cent), Keppel DC REIT (–3.02 per cent), City Developments (–2.35 per cent), Genting Singapore (–1.59 per cent), and Mapletree Pan Asia Commercial Trust (–1.48 per cent). DFI Retail’s decline may be linked to consumer spending concerns and rising competition in the grocery sector. The REIT losses align with the broader sector weakness. City Developments, which also saw unusual volume at 1.9 times its average, faces headwinds from the property market slowdown and higher interest rates.
Volume and Momentum Analysis
Volume patterns offer clues about conviction behind price moves. City Developments traded at 1.9 times its average volume on the final day, coinciding with a 2.98 per cent drop. This elevated turnover with a price decline suggests distribution or profit-taking. Similarly, CapitaLand Investment saw 1.6 times average volume amid the merger talk news, while Keppel DC REIT experienced 1.5 times average volume as its price fell by 2.17 per cent. For investors, unusually high volume on a down day is a warning sign that selling pressure may be building.
In contrast, the volume in DBS and OCBC remained robust but did not reach an unusual multiple of their averages. Their steady upward drift on decent volume is a healthier sign of accumulation. The concentration of turnover in banks – DBS, OCBC, and UOB together accounted for over S$424 million on the final day – illustrates where institutional money is flowing. Singtel, despite being a loser on the day, saw S$129 million in turnover, indicating active debate among traders about its valuation.
From a momentum perspective, several stocks are hovering near their 52-week highs. DBS, OCBC, SATS, Singapore Exchange, Singapore Airlines, UOB, and Wilmar are all within 5 per cent of their 52-week peaks. This cluster of stocks near highs could mean further upside if earnings support current valuations, but it also raises the risk of a pullback if sentiment shifts. Conversely, six stocks are within 5 per cent of their 52-week lows: CapitaLand Investment, CapitaLand Ascendas REIT, Frasers Centrepoint Trust, Keppel DC REIT, Mapletree Industrial Trust, and Sembcorp Industries. Contrarian investors may see opportunity here, but one must consider whether the low is a genuine value trap.
Two stocks – ST Engineering and Venture Corporation – sit below their 50-day moving averages but above their 200-day moving averages. This technical pattern, sometimes called a “dip buy” setup, suggests that the short-term trend has cooled but the long-term uptrend remains intact. ST Engineering’s price of S$10.60 is S$0.20 below its 50-day average, while Venture at S$16.20 is over S$1 below its 50-day average. Both have strong fundamental stories: ST Engineering has a low beta and a robust 11.7 per cent revenue growth, while Venture is a technology manufacturer with a diversified customer base. For patient investors, these dips might present entry points.
Impact of Macroeconomic or Geopolitical Factors
The week was overshadowed by significant geopolitical and trade developments that have direct implications for Singapore’s economy and stock market. On 24 July, the United States imposed a new 12.5 per cent tariff on Singapore, citing alleged failure to ban imports produced with forced labour, as reported by The Straits Times and CNA. The tariff affects about one-third of Singapore’s exports to the US, though technology goods and semiconductors are reportedly exempt. This announcement came on the final trading day of the week, and the STI still managed to close slightly higher, suggesting that markets had already partly priced in the risk or that other factors offset the negative sentiment.
The tariff news is a significant headwind for trade-dependent sectors such as logistics, manufacturing, and certain services. However, the STI’s composition is dominated by domestic-oriented banks, property developers, and defensive consumer stocks, which are less directly exposed to tariffs. The local banks, in particular, benefit from high interest rates and a relatively insulated domestic loan market. Analysts remain broadly positive on the outlook for banks, as highlighted by The Edge Singapore on 24 July, noting that the sector’s record share prices are supported by strong earnings and capital ratios. DBS, which recently surpassed the S$200 billion market capitalisation milestone, has delivered year-to-date total returns of nearly 30 per cent, according to a 19 July Business Times feature.
Geopolitical tensions in the Middle East also contributed to market volatility. On 23 July, Singapore shares fell amid increased concerns about supply availability following Red Sea incidents and US-Iran strikes, as reported by Yahoo Finance. These events drive up energy prices and shipping costs, which could benefit Seatrium and Yangzijiang but hurt airlines and consumer discretionary stocks. Singapore Airlines, despite being near its 52-week high, faces fuel cost uncertainty, while SATS, which handles ground services, may see demand fluctuate.
On a more positive macroeconomic note, the Monetary Authority of Singapore (MAS) is expected to hold its exchange rate policy steady at its July meeting, as indicated by multiple sources. The Edge Singapore and Singapore Business Review both reported on 23–24 July that mild inflation and balanced growth risks support a pause in tightening. A stable Singapore dollar environment removes one layer of uncertainty for investors and helps REITs, which often have offshore assets.
The broader investment backdrop was underlined by GIC’s announcement of lower returns, reported by The Straits Times on 24 July. The sovereign wealth fund cited wars, tariffs, and volatile global markets as constraints. For retail investors, this is a reminder that even the most sophisticated long-term investors are facing headwinds, and patience and discipline are more important than ever.
Portfolio Strategy Recommendations
Given the current environment, a core-satellite portfolio approach remains appropriate for novice investors. Core holdings should consist of large-cap, stable companies with low beta, high institutional ownership, and predictable earnings. From the data, stocks that fit this description include DBS Group Holdings (beta 0.28), OCBC (beta 0.18), UOB (beta 0.37), Singapore Exchange (beta 0.25), and Singapore Telecommunications (beta 0.25). These names are unlikely to skyrocket in a short period, but they offer relatively steady returns and dividends. The banks, in particular, are supported by analyst optimism and record share prices, suggesting that the momentum may have further to run, though investors should be mindful of valuations near highs.
Another core candidate is Wilmar International, with a beta of just 0.10 and a dividend yield that is not among the highest but is underpinned by a resilient business in agricultural commodities. The stock is near its 52-week high, which reflects consistent earnings. For defensive income, Thai Beverage offers a low beta of 0.46 and a price-to-earnings ratio of 11.4 times, making it relatively cheap among defensives.
For the satellite portion of the portfolio, investors seeking higher growth can consider Yangzijiang Shipbuilding, Seatrium, and Keppel DC REIT, but with caution. Yangzijiang’s low P/E of 9.5 times and high beta of 0.87 make it a volatile but potentially rewarding satellite pick. The stock has rallied sharply this week, so waiting for a pullback could improve the risk-reward profile. Seatrium, with a beta of 0.21 and 17 per cent revenue growth, offers exposure to the energy sector without excessive price swings. Keppel DC REIT, despite its recent weakness near a 52-week low, has a beta of 0.84 and 14.5 per cent revenue growth, indicating potential for a rebound if data centre demand remains strong.
REITs overall are tempting for their high dividend yields, but the sector faces multiple headwinds: interest rate uncertainty, slower rental growth, and merger talk collapses. The analyst view that “positive surprises” may be in store for S-REITs’ first-half earnings, as reported by The Business Times on 21 July, offers some hope, but investors should treat these as satellite positions rather than core holdings.
For novice investors who prefer a diversified single-product solution, the SPDR STI ETF remains the simplest option. Its current price of S$5.663 is within striking distance of the 52-week high, but the ETF’s low expense ratio and broad diversification reduce the risk of picking a wrong stock. Regular monthly investing in the ETF, known as dollar-cost averaging, helps smooth out entry points over time.
Outlook for the Coming Week
The STI enters the new trading week at a critical juncture, just 7 points shy of its 52-week high. The ability to break through the 5,595 resistance level will depend on whether the positive momentum in banks can overcome the drag from REITs and the fresh tariff headwinds. Earnings season for S-REITs is about to begin, with several blue-chip REITs reporting next week, as noted by Yahoo Finance on 23 July. These results will be closely watched for clues about distribution per unit trends, portfolio occupancy, and management guidance. A series of better-than-expected reports could spark a relief rally in the sector, lifting the STI.
However, the macro environment remains unsettled. The US tariff on Singapore took effect on 24 July, and its economic impact will take time to materialise. Market participants may react with caution, especially if more details emerge about which products are affected. Separately, any escalation in Middle East tensions could push oil prices higher, benefiting Seatrium but hurting airlines and consumer spending. The MAS rate decision, expected around the end of July, is likely to be a non-event, but any hawkish surprise could further pressure REITs.
Despite the risks, the STI’s resilience in the face of negative headlines is a positive sign. Historically, markets that shrug off bad news tend to have underlying strength. For novice investors, the best course of action is to maintain a disciplined investment plan, avoid chasing momentum in hot stocks, and consider adding to core positions on any significant dips. The coming week will be a test of whether the brief setback on Thursday was a simple blip or the start of a broader correction. If the STI can sustain above 5,550 and eventually challenge the 5,600 level, the bullish trend will remain intact. If a pullback occurs, the 5,500 level, which served as support earlier in the week, may offer a buying opportunity for long-term portfolios.
References
[1] The Business Times; Singapore stocks gain as regional markets end mixed; STI up 0.5%; 21 Jul 2026
[2] Yahoo Finance; Singapore Shares Incur Losses Amid Increasing Concerns Over Supply Availability; 23 Jul 2026
[3] Yahoo Finance; Singapore Shares Gain More Than 1% as AI Boom Extends; MetaOptics Soars 11%; 22 Jul 2026
[4] The Business Times; Singapore stocks fall on Thursday, bucking regional trend; STI down 0.2%; 23 Jul 2026
[5] The Business Times; Singapore shares rise on Wednesday; STI up 1.2%; 22 Jul 2026
[6] CNA; Time to sell or too late to buy? What to know about Singapore banks' record share prices; 22 Jul 2026
[7] The Edge Singapore; Analysts remain broadly positive on outlook of banks; 24 Jul 2026
[8] The Business Times; DBS' S$200 billion milestone: What will it take to create more high-performing big-cap stocks?; 19 Jul 2026
[9] The Edge Singapore; CapitaLand-Mapletree merger talks said to stall; 23 Jul 2026
[10] The Business Times; Temasek-backed property firms' merger talks are said to stall; 23 Jul 2026
[11] The Business Times; 'Positive surprises' in store for S-Reits' H1 earnings as valuations lag fundamentals, say analysts; 21 Jul 2026
[12] Yahoo Finance; 3 Singapore Blue-Chip REITs Report Next Week; 23 Jul 2026
[13] The Straits Times; Trump imposes new 12.5% tariff on Singapore on alleged forced labour ban violation; 24 Jul 2026
[14] CNA; US hits Singapore with 12.5% tariffs, citing failure to ban imports produced with forced labour; 24 Jul 2026
[15] The Business Times; US imposes new tariffs on 60 partners over forced labour concerns; Singapore subject to 12.5% levy; 24 Jul 2026
[16] The Edge Singapore; MAS set to hold rates on mild inflation, signal tightening; 24 Jul 2026
[17] Singapore Business Review; MAS seen holding policy in July on balanced growth and inflation risks; 23 Jul 2026
[18] The Straits Times; Singapore's GIC posts lower returns as wars, tariffs turn global markets volatile; 24 Jul 2026
[19] Yahoo Finance; Singapore Shares Surge Over Rebound in Chipmaker Stocks; HS Optimus Zooms 17%; 21 Jul 2026
---
Disclaimer
Not financial advice. The author is not licensed to provide investment advice in Singapore. This is general commentary and personal opinion based on publicly available information, and does not take account of your objectives, financial situation or needs. Figures are compiled from public sources and may be incomplete, delayed or wrong — verify against the company's own filings and SGX before relying on anything here. The author may hold positions in the securities mentioned. Do your own research, and consider speaking to a licensed financial adviser before making any investment decision.
No comments:
Post a Comment