SINGAPORE — Singapore shares ended slightly firmer on Friday, 26 December 2025, as the Straits Times Index (STI) held near year-end highs despite holiday-thinned liquidity across Asia. The session’s tone was shaped by a mix of local growth signals—notably a strong jump in Singapore’s factory output—alongside global cross-currents from record precious-metal prices, a shifting US rate-cut narrative, and fresh policy and corporate developments that investors see as supportive for Singapore equities going into 2026. [1]
Market Wrap: Straits Times Index closes higher, tests a 52-week high
The benchmark STI closed at 4,642.18, up 5.84 points (+0.13%) on the day. Trading was relatively contained, with the index moving between 4,621.10 and 4,647.45; notably, the day’s high matched its 52-week high (4,647.45), underscoring how tight the index is trading near its upper range into the final stretch of 2025. [2]
Liquidity conditions were visibly lighter than earlier in the week, a common feature of the post-Christmas window. Reported index volume for the session was 36.05 million, far below 84.33 million on the shortened Christmas Eve (Dec 24) session—another marker of how quickly participation fades at year-end. [3]
From a longer lens, the STI’s momentum remains constructive: the index is indicated as up about 23.09% over the past 12 months, reflecting a strong run that has kept Singapore on the radar of regional allocators looking for a blend of dividends, defensiveness, and policy-backed market deepening. [4]
Why today’s trading felt “quiet” but constructive
Across the region, Friday’s tone was upbeat but subdued in activity. A number of markets were closed for the Boxing Day holiday, leaving thinner order books in those that were open. Regional commentary highlighted the “Santa Claus rally” effect—an observed tendency for equities to rise in the final days of December and early January—helped by improved sentiment after recent Wall Street gains. [5]
At the same time, the global tape was pulling investors in multiple directions:
- Asian equities pushed higher overall, with major markets such as Japan showing resilience even amid thin holiday trade. [6]
- Gold and silver surged to record highs, reinforcing the idea that—beneath the surface—investors are still paying up for hedges against macro and geopolitical uncertainty. [7]
- Oil rose modestly on supply-risk headlines, but remains on track for a steep annual decline—an important offset for Singapore-listed energy and marine names that react not only to spot prices but to longer-term project and capex cycles. [8]
For Singapore, that combination often translates into a “steady” bid: enough risk appetite to keep cyclicals supported, but enough uncertainty to maintain demand for quality, dividend-oriented large caps.
Singapore macro: Factory output jumps 14.3% y/y, led by pharma and electronics
The most Singapore-specific datapoint in Friday’s newsflow was the latest industrial production print.
Singapore’s factory output rose 14.3% year-on-year in November, easing from October’s revised 28.9% increase but still reflecting a strong manufacturing backdrop. The surprise wasn’t just the headline: it also showed breadth across most clusters, and it came only slightly below economists’ median expectation of 15% in a Bloomberg poll. [9]
Key details that matter for equity investors:
- Biomedical manufacturing led the surge, with output up 79.3% y/y in November, reflecting the continued volatility—but also earnings significance—of pharma-heavy activity in Singapore’s production base. [10]
- The electronics sector grew 8.9% y/y, extending October’s gains. Within electronics, the infocomms and consumer electronics segment jumped 87.7%, while semiconductors rose 4.9% (and some sub-segments declined). [11]
For the Singapore stock market, this kind of data tends to reinforce two narratives at once:
- Singapore’s role as a high-value manufacturing hub (supportive for industrial and tech-linked services names), and
- The importance of looking through headline volatility to judge sustainability (especially when pharma prints swing widely month to month).
Global cues: Record metals, shifting rate-cut expectations, and a softer US dollar tone
Precious metals at records: what it signals for risk appetite
Gold and silver were the standout global price action points on Dec 26. In Asia trade, spot gold climbed above US$4,500/oz and silver reached the US$75/oz area, with reports attributing the rally to safe-haven demand and expectations that US interest rates continue to ease next year. [12]
For Singapore equities, record metals are not a direct earnings driver (Singapore is not a commodity-index market), but the signal matters:
- It can indicate portfolio hedging is still in demand even as equities grind higher, which can keep positioning cautious.
- It often correlates with the idea that rates are peaking or easing, which tends to be supportive for REIT valuations and other yield-sensitive sectors.
Asia equities firmer, but liquidity matters
Global market wrap reporting pointed to Asian equities moving higher overall on Friday, supported by improved risk appetite and currency dynamics (including a weaker yen narrative cited in broader coverage). [13]
However, Singapore investors typically treat late-December moves with caution: thin markets can exaggerate price action, and the real test often comes when full liquidity returns in early January.
Oil prices rise on supply-risk headlines, but 2025’s trend is still down
Oil moved up modestly on Friday amid news tied to Venezuela supply risks and other geopolitical developments, but the bigger context remains bearish for 2025: Brent and WTI were described as being on track to fall about 16% and 18% for the year, respectively—the steepest annual declines since 2020—amid expectations that supply may outpace demand next year. [14]
That split—headline spikes vs. soft annual trend—can create a selective environment on SGX: investors tend to distinguish between companies levered to short-term oil prices and those supported more by balance sheets, project backlogs, or structural themes (energy transition, offshore wind, maintenance cycles).
Corporate and sector headline: Keppel DC REIT lease extension news spotlights “Digital Infrastructure Singapore”
One of the more consequential Singapore corporate updates circulating on Dec 26 involved Keppel and Keppel DC REIT.
A release carried by MarketScreener/Publicnow reported that the relevant authorities granted conditional approval for a 10-year land tenure lease extension to 15 July 2050 for the Keppel Data Centre Campus at Genting Lane. The release said this forms part of the divestment of two AI-ready hyperscale assets (Keppel DC Singapore 7 and 8) to Keppel DC REIT, and that the REIT will pay a final S$350 million (out of total sale consideration of S$1.38 billion) tied to securing the extension. [15]
Why this matters for Singapore stocks:
- It reinforces Singapore’s positioning as a supply-constrained data centre market—a theme that supports long-duration cashflow assets when backed by extended land tenure. [16]
- It also highlights the broader “digital infrastructure” pipeline narrative: the same release noted that, post-extension and following other portfolio moves, Keppel DC REIT’s assets under management could rise from S$5.7 billion to S$6.2 billion (as described), linking corporate action to growth expectations that can influence REIT sentiment more broadly. [17]
In a market like Singapore—where REITs and dividend stocks are central to index behaviour—this kind of tenure and cashflow visibility can be a meaningful sentiment anchor even on a quiet trading day.
Forecasts and analysis: What strategists are saying into 2026 (and why opinions diverge)
With the STI already near the top of its 52-week range, investors are increasingly focused on whether 2026 brings continued upside—or a pause after a strong year.
The “banks may drag” case: Macquarie’s 4,500 end-2026 target
One influential view highlighted in recent market analysis is that the STI’s heavy dependence on the three local banks could become a headwind if rates fall.
Macquarie is cited as expecting limited upside for banks, noting that the banks account for nearly half of the STI’s weight, and that lower interest rates could pressure revenues. In the same commentary, Macquarie’s end-2026 STI target is 4,500 points. [18]
This framework is important because it sets up the central 2026 debate for Singapore equities:
- If rate cuts arrive faster or deeper, banks’ net interest margins could compress.
- But if growth holds and asset quality remains steady, bank dividends can still provide an anchor—even if share price upside moderates.
The “valuation + dividends still work” case: OCBC’s overweight stance
A more constructive outlook emphasises valuation support and dividends.
OCBC Investment Research is cited as keeping an “overweight” call on the Singapore market, pointing to undemanding valuations, expectations of single-digit earnings growth, attractive dividend yields, and the possibility of a re-rating for undervalued stocks. The same analysis referenced a forward P/E around 13.9x for FY2026 and dividend yields around 4.9% (2026) and 5.2% (2027) (as estimated), describing these as inexpensive versus historical averages and regional markets. [19]
In practical terms, this supports continued interest from investors seeking:
- yield stability,
- a defensive macro profile, and
- “policy tailwinds” that may improve liquidity and broaden market participation.
The more bullish index target: DBS points to 4,880 (with total return focus)
Another forward-looking reference point comes from DBS Group Research, which projected an end-2026 STI target of 4,880 and framed potential gains in total return terms (including dividends and buybacks). [20]
Even for investors who don’t adopt that exact target, the key takeaway is methodological: in Singapore, where dividends and buybacks matter, many strategists argue that headline index levels understate investor outcomes.
Policy tailwinds: Measures aimed at deepening SGX liquidity are now part of the narrative
Beyond earnings and global macro, 2026 positioning is increasingly influenced by policy and market-structure reforms.
A separate analysis of Singapore’s market review measures described a first set of demand, supply, and regulatory initiatives, including:
- A S$5 billion Equity Market Development Programme (EQDP), under which MAS and the Financial Sector Development Fund would invest with selected fund managers running strategies with a strong focus on Singapore stocks, especially small- and mid-caps. [21]
- Proposed tax changes (including a stated intention to exempt tax on certain qualifying income tied to funds that invest substantially in Singapore-listed equities). [22]
- Proposed listing incentives such as a 20% corporate income tax rebate for new primary listings and 10% for new secondary listings, with caps depending on market capitalisation. [23]
- A more risk-based approach by SGX Regulation to queries/alerts/suspensions, and consultation on removing the financial watch-list—measures framed as reducing stigma and avoiding “knee-jerk delistings.” [24]
The same analysis cited a Maybank observation that market volumes were up 50%, delistings were falling, and IPOs were increasing—suggesting early signs that reforms could change behaviour at the margin. [25]
For investors, this matters because Singapore’s historical challenge has not been “quality,” but liquidity and breadth. If reforms translate into deeper participation beyond the top blue chips, the market’s valuation ceiling could rise.
What to watch next for Singapore stocks
As 2025 heads into its final sessions, Singapore market participants will likely focus on three near-term themes:
- Liquidity returning in early January
Late-December moves can be misleading. The STI’s ability to hold near highs when full volume returns will be an important signal. - Rates and the “banks vs. REITs” balance
Strategist debate is increasingly centred on whether falling rates shift leadership away from banks toward rate-sensitive sectors—especially REITs and property-related names. [26] - Evidence that SGX reform measures are “showing up” in trading and listings
If volume, research coverage, and IPO flow continue improving, the market’s narrative could broaden beyond the STI’s traditional concentration. [27]
Bottom line: On 26 December 2025, Singapore stocks delivered a modest gain, with the STI closing at 4,642.18 and trading within a tight range near a 52-week high. Beneath the quiet surface of holiday trading, investors are digesting genuinely market-moving inputs: a strong manufacturing pulse, record global precious metals, and a growing list of policy and corporate actions that could shape liquidity and sector leadership into 2026. [28]
References
1. www.investing.com, 2. www.investing.com, 3. www.investing.com, 4. www.investing.com, 5. www.businesstimes.com.sg, 6. www.reuters.com, 7. www.reuters.com, 8. www.businesstimes.com.sg, 9. www.businesstimes.com.sg, 10. www.businesstimes.com.sg, 11. www.businesstimes.com.sg, 12. www.businesstimes.com.sg, 13. www.reuters.com, 14. www.businesstimes.com.sg, 15. www.marketscreener.com, 16. www.marketscreener.com, 17. www.marketscreener.com, 18. www.theedgesingapore.com, 19. www.theedgesingapore.com, 20. www.dbs.com, 21. www.theedgesingapore.com, 22. www.theedgesingapore.com, 23. www.theedgesingapore.com, 24. www.theedgesingapore.com, 25. www.theedgesingapore.com, 26. www.theedgesingapore.com, 27. www.theedgesingapore.com, 28. www.investing.com
