A volatile week driven by on-off US-Iran conflict and AI selling/rebound

Date: June 15, 2026

• The STI fell below 5,000 before closing at 5,025.8, a loss of 0.5%
• US-Iran conflict, AI selling were the main factors
• Space X’s debut on Friday provided main focus for Wall St
• CGS upgraded banking sector to “overweight’’
• Singapore banks’ selling on new China scrutiny of wealth flows ‘overblown’: Maybank
• iEdge Singapore Next 50 Review favoured tech stocks: SGX Research
• AEM, UMS & Frencken are main semiconductor plays: SGX Research
• SGX’s May securities market turnover up 70% to S$45.8b

 

Hovering around the 5,000 level

Wall Street’s volatility spilled over to the local market last week, resulting in large swings for the Straits Times Index in which it fell below the 5,000 mark, reaching an intra-week closing low of 4,958.85 on Wednesday.

The selling was mainly driven by two factors – renewed conflict between the US and Iran, and worries over the high valuations in artificial intelligence (AI) and technology stocks.

As the week progressed, two factors helped stocks rebound – signs that there could soon be a deal between the US and Iran, and the listing of AI firm Space X on Nasdaq, the largest initial public offer (IPO) in history.

Thanks to rises on Thursday and Friday, the STI’s loss for the week was reduced to about 24 points or 0.5% at 5,025.80. Average daily volume was S$2.2b versus S$2.3b the previous week.

All eyes on Space X’s debut on Nasdaq

As it turned out, Space X’s Friday debut was spectacular, the stock closed at US$160.90, 19.2% above its US$135 offer price, lifting its market capitalization above US$2 trillion.

U.S. inflation accelerated in May, with the consumer price index rising 4.2% from a year earlier, matching economists’ expectations and increasing from April’s 3.8% annual rate.

Middle East tensions remained in focus after President Donald Trump signalled a potential diplomatic breakthrough with Iran, saying a planned U.S. military operation had been called off as negotiations moved closer to a possible agreement involving several countries across the region.

For the week, the blue-chip Dow climbed up 0.66%. At the same time, the benchmark S&P 500 moved up 0.65%, while the tech-heavy Nasdaq Composite added 0.70%.

CGS upgraded banking sector to “overweight’’

CGS International (CGSI) upgraded its outlook on the Singapore banking sector from “neutral” to “overweight”, amid robust capital inflows and continued loan growth.

In a 9 June report, the brokerage said it believes local lenders are well-positioned for return on equity (ROE) expansion, driven primarily by net interest income (NII) growth and ongoing structural gains within their wealth management business.

In line with this upgrade, CGSI raised its financial year 2027 to 2028 earnings per share (EPS) estimates across the three local banks, with increases ranging from 2.6 to 6.3%.

A strong US non-farm payroll report for May has fuelled market expectations of a potential US Federal Reserve interest rate hike by late 2026.

CGSI noted that higher US rates could present local banks with opportunities to deploy excess capital into higher-yielding instruments, supporting FY2027 NII growth even if it may not translate to a recovery in domestic benchmark rates such as Singapore Overnight Rate Average.

DBS remains CGSI’s sector top pick with an “add” rating and a target price raised to S$69.90 from S$63.80. The brokerage highlighted DBS’ “best-in-class ROE” and a supportive dividend profile.

“DBS has expressed confidence it can deliver a step-up of S$0.06 to its quarterly core dividend per share (DPS) in Q4 2026 that would translate to an annualised DPS of S$3.48,” the analysts noted.

UOB was upgraded from “hold” to “add” with its target price lifted to S$42.60 from S$38.70. The bank’s sector-leading Casa (current account/savings account) ratio of 57% puts it in the best position to benefit from potentially higher interest rates, the analysts said.

OCBC was also upgraded to “add” from “hold” with a higher target price of S$26.

“We upgrade OCBC from ‘hold’ to ‘add’ as we believe OCBC’s twin businesses of wealth management and insurance could position it to better capture the structural inflow of capital into Singapore and Hong Kong,” the analysts said.

Singapore banks’ selling on new China scrutiny of wealth flows ‘overblown’: Maybank

The recent dumping of Singapore bank shares on concerns of a possible slowdown in wealth management growth in North Asia was “overdone”, Maybank Securities said on Thursday.

Bank stocks had come under pressure on news of China’s tightening of fund outflows. Given the Singapore banking trio’s focus on wealth management as a growth engine – for instance, DBS plans to open 18 new and 36 upgraded wealth centres across the Asia Pacific by 2027– some analysts fear the tighter framework could hinder the strategy.

China’s State Council Order No 837, which takes effect on Jul 1, could restrict North Asian wealth management pipelines.

The new regulations will for the first time bring resident individuals within mainland China under the official scope of outbound investment filings and security reviews.

The move prompted JPMorgan to downgrade DBS to “neutral” on Wednesday. However, Maybank analyst Thilan Wickramasinghe is maintaining a “positive” rating on Singapore banks, arguing that the direct impact should be limited.

“Onshore Chinese wealth is not a client segment for Singapore banks,” he said. “Offshore capital, which is the key segment in North Asia, should be unaffected by the new rules’’.

Maybank said the regulations appear targeted at closing unregulated outbound flows from China, rather than stopping all outbound wealth movements.

The brokerage believes the key policy objective is to bring flows into approved and compliant channels, which is “supportive of China’s own ambition of internationalising the renminbi”.

The new rules are aimed mainly at China residents living in mainland China, it added – a segment Singapore banks are not licensed to serve.

In 2025, North Asia accounted for 22% of profit before tax for DBS, 18% for OCBC and 7%  for UOB, Maybank noted.

iEdge Singapore Next 50 Review favoured tech stocks: SGX Research

In a 10 June Market Update, SGX Research said the June 2026 review of the iEdge Singapore Next 50 Index (Next 50) added and removed four constituents and that the four inclusions reflect strong market activity and positioning across global supply chains, spanning semiconductor test, healthcare exports, industrial logistics and high‑end hardware distribution.

“Inclusions include AEM, Top Glove, UI Boustead REIT, and PC Partner. The four omissions, Singapore Post, Digital Core REIT, Wee Hur and China Sunsine Chemical, remained eligible for index inclusion, but were displaced by the higher market capitalisation constituents’’ said SGX Research.

It added that technology is the clear beneficiary of the liquidity‑weighted framework, with its combined weight rising to 26.2% from 15.8% in the standard index, alongside tighter bid‑ask spreads, and stronger representation across both the largest weights and the reserve list.

“If the technology sector sustains its early year momentum, its influence within the index could surpass S-REITs, marking a shift from income‑led exposure toward more growth and global flow‑driven sectors’’ said SGX Research.

AEM, UMS & Frencken are main semiconductor plays: SGX Research

In a 4 June report, SGX Research said within Singapore’s technology sector in 2026, net institutional inflow and valuation expansion have been highly concentrated in semiconductor test, equipment, and production-support exposures, reinforcing these segments as the primary drivers of sector re-rating.

“Across the dozen semiconductor-linked names, valuation expansion has been led by AEM, UMS and Frencken, with P/E moving sharply higher across the dozen and the average and median now around 50x and 32x, highlighting broad-based re‑rating beyond the top three’’ said SGX Research.

“In the AI hardware segment, InnoTek has re‑rated sharply to around 83x on a current basis, with forward P/E of about 22x for FY26 indicating expectations that earnings will scale as AI‑driven capacity and customer traction translate into revenue growth’’.

SGX’s May securities market turnover up 70% to S$45.8b

The Singapore Exchange (SGX) reported that May’s securities market turnover rose 70% year on year to S$45.8 billion and that securities daily average value (SDAV) for the month jumped 79% year on year to S$2.4 billion, the highest level recorded since October 2007.

This came as Singapore’s stock market claimed the title of South-east Asia’s largest by market capitalisation and demand for trusted risk-management tools expanded across equities, FX and commodities, SGX said.

Derivatives traded volume increased 20 per cent year on year to 30.5 million contracts, while daily average volume for derivatives gained 27 per cent to 1.6 million contracts, marking the third-largest on record.

STI exchange-traded funds also booked their 15th consecutive month of net inflows, drawing S$129 million in May to bring year-to-date inflows to S$687 million.

“Momentum in small- and mid-cap stocks excluding real estate investment trusts (Reits) continued to accelerate,” SGX said.

SDAV for this segment rose 24 per cent month on month and multiplied by more than four times year on year. Institutional investors remained net buyers of small- and mid-caps for the fifth consecutive month, pushing total inflows over the past 12 months past S$800 million.