DBS, OCBC’s all-time highs push STI to new records above 4,700

Date: January 12, 2026

• The STI gained 88 points or 1.9% at 4,744.66
• On Wednesday the STI set a new closing record of 4,747.6
• US indices also closed Friday at new record highs
• DBS, OCBC rose to new highs, UOB lagged behind
• FTSE ST Industrials Index generated 44% total return in 2025
• UI Boustead gearing up for US$700m IPO in March: Bloomberg
• US dollar weakness sharpens case for Singapore stocks: OCBC research chief
• Analysts predict more upside for STI – but not all

 

A New Year brought with it new all-time highs

The Straits Times kicked off its first full trading week of 2026 with a bang, rising above the 4,700 mark for the first time ever and setting two consecutive all-time highs on Tuesday and Wednesday. It finished the week at 4,744.66 just shy of Wednesday’s 4,747.60, a nett gain of 88 points or 1.9% for the week.

Average daily volume was S$1.61b and most of the index’s gains were led by the banks.

Wall Street also closed at record highs

Wall Street closed out the first full trading week of the new year at record levels on Friday, with the benchmark S&P 500 index ending about 34 points shy of the historic 7,000 mark.

A revival in the tech trade, coupled with mixed labour market economic data, boosted sentiment and offset geopolitical escalation between the U.S. and Venezuela.

For the week, the S&P 500 added 1.6%, while the tech-heavy Nasdaq Composite advanced 1.9%. The blue-chip Dow Jones Industrials Average climbed 2.3%.

DBS and OCBC hit all-time highs, UOB lagged behind

Share prices of DBS and OCBC hit all-time highs yet again in the first few days of 2026. DBS rose to as much as S$58.80 on Wednesday whilst OCBC crossed S$20 for the first time a day earlier, reaching as high as S$20.25 on Wednesday.

On Friday, DBS closed at S$57.60 and OCBC at S$19.80. According to a Bloomberg analyst consensus as at Jan 7, their respective 12-month price targets were S$58.13 and S$19.65.

According to the Business Times, 55.6% of analysts had “buy” calls on DBS, while 61.1% had “buy” calls on OCBC.

The story at UOB is a different one, however, with the counter having “hold” calls from 64.7% of analysts in the Bloomberg consensus.

UOB took a hit after the bank took pre-emptive general allowances in its Q3 results, but has been steadily rising since. The counter closed at S$36.01 on Wednesday, above its 12-month price target of S$35.97 but below its peak share price of S$39.20 in February 2025. It ended the week at S$36.02.

Analysts noted that DBS and OCBC have benefited from the flight to quality to Singapore-dollar assets in recent months.

Jayden Vantarakis, head of Asean equity research at Macquarie Capital, said that while equity markets have generally been positive, investors view the Singapore dollar as a strong asset to hold in the current volatile environment, especially given strong macroeconomic data.

Lorraine Tan, director of Asia equity research at Morningstar, said that with interest rates expected to fall, quality companies with attractive dividend yields are being seen as a proxy to holding Singapore government bonds.

She views the current share prices of DBS and OCBC as “quite rich” on an intrinsic valuation basis. Nevertheless, their dividend yields at around 5% remain attractive.

FTSE ST Industrials Index generated 44% total return in 2025

In a 6 Jan Market Update SGX Research said the FTSE ST Industrials Index has gained 3% in early Jan trading, following a 44% total return in 2025 and that the Index also recorded S$265 million in net institutional inflows last year and maintained an average daily turnover (ADT) of S$193 million.

“Hong Leong Asia generated the highest gains with the Index in 2025 and 1H25 with respective 173% and 81% total returns, while Wee Hur Holdings and Yangzijiang Shipbuilding (Holdings) both led the Index in 2H25 with 57% total returns’’ reported SGX Research.

“In 2H25, several stocks within the Industrials Sector experienced remarkable growth in trading activity compared to 1H25. Catalist-listed Sanli Environmental’s 2H25 ADT surged nearly 75 times, while Soilbuild Construction Group saw a 26-fold increase and Low Keng Huat (Singapore) recorded a 25-fold surge’’.

“Sunpower Group’s ADT expanded 22 times, ASL Marine Holdings grew 18 times, and Vallianz Holdings rose 12 times over the same period. KSH Holdings and Lum Chang Holdings both posted around 10- to 11-fold increases in ADT, while Spindex Industries and Ever Glory United Holdings each saw their 2H25 ADT rise by about 8 times versus 1H25’’.

UI Boustead gearing up for US$700m IPO in March: Bloomberg

According to a Bloomberg report, UI Boustead Real Estate Investment Trust (REIT) is gearing up for a listing in Singapore as early as March, targeting proceeds of at least S$900 million.

The REIT unit of Boustead Singapore will begin taking investor orders as soon as next month, said Bloomberg.

Boustead Singapore applied to the Singapore Exchange and the Monetary Authority of Singapore on behalf of UIB Holdings for a REIT IPO and listing, according to a September filing.

The REIT’s IPO portfolio will include more than 20 leasehold properties in Singapore and two freehold properties in Japan, for a total agreed property value of USS$1.9 billion, according to the filing.

US dollar weakness sharpens case for Singapore stocks: OCBC research chief

Foreign investors seeking to diversify away from US dollar-denominated assets may find Singapore equities increasingly attractive, said Carmen Lee, head of equity research at OCBC Group Research in a BT report.

Such diversification flows could, in turn, help lift trading volumes on the Singapore Exchange (SGX) in 2026, she added.

“I’m counting on it, because the government put in so much effort in promoting (the equities market),” Lee was quoted as saying, pointing to initiatives such as the S$5 billion Equity Market Development Programme.

Foreign investors are likely to find Singapore dollar-denominated assets “very attractive” amid the Singdollar’s relative strength against the greenback, Lee said.

Over the past year, the US dollar has depreciated about 6.7%. That decline has weighed on returns for Singdollar-based investors holding US dollar assets, once those investments are converted back into the Republic’s currency.

Conversely, investors whose home currencies have weakened against the Singdollar could see stronger returns from Singdollar-denominated assets when converting gains back into their home currency.

This currency dynamic, coupled with the strong performance of the benchmark Straits Times Index (STI) in 2025, strengthens the case for Singapore equities, said Lee.

Analysts predict more upside for STI

UOB Kay Hian (UOBKH) set a bullish target, citing support from the government’s Equity Market Development Programme (EQDP) and a return to earnings growth for key index heavyweights.

“Given the prevalence of large-cap blue-chip defensive stocks with strong Singapore dollar-based cashflow generation and relatively high dividend yields, the Singapore market will continue to attract fund flows,” said UOBKH analyst Adrian Loh, forecasting a 6.3% year-on-year earnings growth for the broader market in 2026.

As a result, it could see a 7.6% upside from its current levels based on UOBKH’s own target prices, said Loh, with a 2026 price-to-earnings forecast of 16 times. Using Bloomberg consensus target prices would result in an STI target of 4,800 points instead, he noted.

OCBC head of equity research Carmen Lee described the environment for 2026 as “constructive”, characterised by a benign global economic outlook and stable regional trade flows.

Singapore’s gross domestic product growth is expected to moderate – OCBC Group Research estimated a drop from 4.8% in 2025 to about 2% in 2026, while UOB Global Economics & Markets Research forecast it to be 2.1%.

Still, the equity market remains attractive relative to regional peers, said Lee. She pointed out that the STI currently trades at a price-to-earnings ratio of 13.5 times, which is expected to ease to 11.7 times by 2027, offering a dividend yield in the 5.1 to 5.2% range.

Lee predicted that a potential revival in listings could further lift the financial sector. With a pipeline of more than 30 potential listings, capital market activities are expected to pick up, directly benefiting local lenders and the exchange.

The banking sector should remain a primary engine of growth, added the OCBC analyst. “The general outlook for 2026 points to stable earnings for the banks, with expected compression in net interest margin, but supported by wealth flows surge and high return on equity,” she said.

However, not all analysts are as convinced. Macquarie Equity Research held a contrarian view, forecasting a year-end decline to 4,500 points.

They warned that the banking sector, which makes up half of the STI, could become a drag on performance as falling interest rates pressure revenues, making 2026 a year for “stock pickers” rather than a broad market rally.

Macquarie analysts instead argued that the banks may be “treading water” in 2026. They forecast the key Singapore Overnight Rate Average to drop below 1 per cent by mid-year, creating revenue headwinds that wealth management fees may not fully offset.

Consequently, they advocated rotating away from banks and into interest-rate sensitive sectors such as Singapore real estate investment trusts (S-REITs).