Monthly Market Wrap: Safe haven inflows pushed STI up 5.3% in July

Date: August 1, 2025

• Supported by a firm Wall St, the STI gained 5.3% at 4,173.77 in July
• Wall St set several all-time highs thanks to strong earnings and encouraging tariff developments
• Singapore market said to benefit from “safe haven’’ inflows
• News that S$1.1b to be given to three funds under MAS’s EQDP also boosted sentiment
• Two IPOs had differing fortunes – Lum Chang Creations on Catalist and Info-Tech Systems on the Mainboard
• CDL shares surged after Philip Yeo exits board
• The US Fed kept rates unchanged as expected but two members disagreed

 

In July, the STI closed above 4,000, then 4,100 and 4,200

July will probably be remembered as the month in which the Straits Times Index not only closed above the 4,000 mark for the first time ever, but also climbed above 4,100 and 4,200.

Boosted by a firm Wall Street which also rose to record highs, and which appears to have forgotten its tariff-related woes that rocked it in April, the local market enjoyed large inflows, said to be because of its “safe haven’’ reputation, though equally plausible is that investors were positioning themselves ahead of the expected large injection of liquidity from the Monetary Authority of Singapore’s Equity Market Development Programme (EQDP).

As it turned out, an announcement in the third week of the month that under the EQDP S$1.1b would be allocated to three fund managers sparked a rally in the index.

It rose for 14 consecutive sessions between 7-24 July, reaching an all-time closing high of 4,273.05 on 24 July, gaining 260 points or 6.5% along the way.

However, as the month drew to a close, the STI weakened for the final five consecutive sessions that dragged the index below the 4,200 level to 4,173.77. The net gain for the month was 209 points or 5.3%.

Average daily volume also improved significantly, to around S$1.6b versus S$1.4b in June.

Wall Street set several all-time highs thanks to positive tariff developments

There were encouraging developments on the tariff front, with the US announcing deals in July with the EU, Philippines, Vietnam, Japan and South Korea.

As a result, the focus shifted to earnings, resulting in several all-time highs for the S&P 500 and Nasdaq Composite.

Safe-haven inflows were the main reason for the STI’s performance

At the start of the month, Maybank said “The STI has held up (in the) year to date despite global volatility. Worsening US policy uncertainty, slower China growth and the intensifying hostilities in the Middle East (are) likely to bolster safe haven flows to Singapore’’.

It added: “Indeed, so far this year, defensive sectors such as telcos and utilities have seen the strongest outperformance. At the same time, flows rotating out of the banks seem to have plateaued (following massive inflows in 2024 to play the interest rate hike cycle), while outflows from real estate investment trusts (REITs) seem to have also bottomed.”

Also at the end of June, UBS updated Singapore equities from “neutral” to “attractive”, citing the market’s defensive appeal amid geopolitical uncertainty.

UBS highlighted a “combination of safe haven characteristics”, including proactive capital-management initiatives undertaken by a handful of companies and a stronger Singapore dollar against the greenback.

“The market’s defensive traits should anchor its performance, while the ongoing equity market reform and capital-management initiatives could provide catalysts for a further re-rating of valuation multiples,” noted UBS.

News that S$1.1b to be given to three funds under MAS’s EQDP also boosted sentiment

Temasek-backed Fullerton Fund Management will be among the first of three asset managers to tap a S$5 billion investment fund initiative announced by authorities earlier this year.

The other two are global fund manager JP Morgan Asset Management and Avanda Investment Management, which is co-founded by former GIC chief investment officer and ex-presidential hopeful Ng Kok Song.

A combined initial sum of S$1.1 billion will be set aside for the three asset managers under the EQDP which was first announced in February by the equities market review group, whose task is to help revive Singapore’s equity market.

Separately, MAS will also set aside S$50 million until 2028 for the Grant for Equity Market Singapore (Gems) Scheme to strengthen research on equities and reduce listing costs for issuers.

The Research Development Grant under Gems will see its maximum funding increase from S$4,000 to S$6,000. With the increase, each research report will receive an additional S$1,000 in grants, with a further S$1,000 if the report is an initiation of research coverage or covers pre-initial public offering stage and newly listed companies.

Two IPOs had differing fortunes – Lum Chang Creations on Catalist and Info-Tech Systems on the Mainboard

Catalist’s latest entrant, Lum Chang Creations, enjoyed a solid start to public life, ending the month at S$0.37 which is S$0.12 or 48% above its S$0.25 offer price.

The company’s offer one million new shares available to the public in Singapore, and 48 million offered via placement – 34 million new shares and 14 million existing ones.

Lum Chang Creations, a spin-off from mainboard-listed real estate developer Lum Chang Holdings, specialises in conservation and restoration interior fit-outs, among other works.

The mainboard’s latest entrant Info-Tech Systems didn’t fare as well, finishing the month at S$0.83 versus its S$0.87 offer price. However, it did close at S$0.91 on it first day of trading.

Its IPO comprised an international placement of around 19.9 million shares allocated for selected investors, which was 5.5 times subscribed, and an offer of five million shares available to the Singapore public, which was 14.4 times subscribed.

CDL shares surged after Philip Yeo exits board

Shares of City Developments Ltd (CDL) shot up S$0.36 or 6.3% to S$5.93 on 16 July after the company announced that non-independent non-executive director Phillip Yeo would leave the board on 31 July. They finished the month at S$6.16.

Mr Yeo had backed executive chairman Kwek Leng Beng in his boardroom battle against his son, chief executive officer Sherman Kwek, earlier this year.

The departure of Yeo comes three months after CDL’s annual general meeting (AGM), when he vocally rallied shareholders against “bullying” by majority directors.

He had openly urged shareholders at the AGM to reject the re-election of four directors, comprising two new appointees Jennifer Young and Wong Su Yen, and two independents Daniel Desbaillets and Wong Ai Ai.

The US Fed kept rates unchanged as expected but two members disagreed

The US Federal Reserve kept its benchmark interest rate unchanged, citing elevated uncertainty over the nation’s economic outlook.

The decision to hold rates steady marks a continuation of the Fed’s “wait-and-see” strategy this year, as it monitors the impact of the Trump administration’s tariffs on consumer prices. But Wednesday’s policy statement also underscored that the growth remains steady despite concerns about slowing economic activity. 

In a press conference on Wednesday, Powell said most FOMC members voted in favour of maintaining the current rate because inflation remains above the Fed’s 2% annual target, while also describing the economy as remaining in good shape.

“The economy is not performing as though restrictive policy were holding it back inappropriately,” he said.

Two voting FOMC members, Fed Governors Michelle Bowman and Christopher Waller, voted in favour of lowering the central bank’s short-term rate — a rare show of dissent at the Fed, where monetary policy is generally set by consensus.

It was the first time since 1993 that two member of the Fed’s Board of Governors have voted against the chair, according to Capital Economics.

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