Tech-Led Rally, Structural Outlook & Economic Impact
February 2026 | Straits Times Index | SGX Research
5,001.56
STI Close (19 Feb 2026)
+1.3% on the session 5.0%
2025 GDP Growth
Revised upward — highest in years +8.1%
STI YTD Gain (as at Feb 12)
Historic 5,000 breach on 12 Feb
Executive Summary
On 19 February 2026, Singapore’s benchmark Straits Times Index (STI) surged 62.98 points, or 1.3%, to close at 5,001.56 — its first sustained hold above the psychologically significant 5,000-point threshold. The session followed a two-day Lunar New Year closure and took a positive lead from Wall Street, where a sharp rebound in technology shares and robust U.S. economic data lifted global risk appetite. This case study examines the structural drivers behind the rally, its sectoral implications, the outlook for Singapore equities through 2026, and the broader macroeconomic impact on Asia’s premier financial hub.
- Background & Context
1.1 The Historic 5,000 Milestone
The STI’s breach of the 5,000 level on 12 February 2026 — and its subsequent consolidation near that level — represents the culmination of a multi-year structural re-rating of Singapore equities. The index delivered a 22.7% price return in 2025, built on a foundation of GDP growth revised to 5.0% for the full year, robust corporate earnings from the banking sector, and a wave of government-backed market development initiatives.
The February 2026 post-Lunar New Year session confirmed the resilience of the rally. After a brief mid-February consolidation (the index dipped to around 4,941 on 13 February following the all-time intraday high of 5,021.27 on 12 February), the market re-established itself above 5,000 on 19 February, driven in part by renewed momentum in global technology equities.
1.2 The Global Technology Catalyst
The immediate trigger on 19 February was a Wall Street-led rebound in technology shares, transmitted rapidly to Asian markets. For Singapore, this transmission operates through several distinct channels rather than through simple index mimicry:
Technology sentiment affects Singapore-listed tech-exposed names and broader risk appetite across the region.
Global rate-cut expectations — often correlated with tech sector optimism — influence dividend demand and REIT valuations.
Improved U.S. economic data signals sustained external demand for Singapore’s export-oriented manufacturing and logistics sectors.
AI-related investment themes directly support Singapore’s electronics cluster and precision engineering segment.
- Structural Drivers of the Rally
2.1 Macroeconomic Foundation
Singapore’s economy delivered exceptional performance entering 2026. The Ministry of Trade and Industry (MTI) revised 2025 GDP growth upward to 5.0% from an advance estimate of 4.8%, with fourth-quarter growth adjusted to 6.9% year-on-year. Key drivers included the electronics cluster (benefiting directly from AI-related semiconductor demand), wholesale trade, and the finance and insurance sector, which recorded broad-based growth across all subsectors.
For 2026, MTI raised its GDP growth forecast to a range of 2.0% to 4.0%, up from the prior guidance of 1.0% to 3.0%, citing an improved global economic outlook and sustained AI investment momentum. Median monthly household market income rose 7.7% in nominal terms to S$12,446, reflecting tightening labour markets and broad-based wealth creation — conditions that support domestic consumer confidence and, by extension, investor sentiment.
2.2 Policy-Driven Market Deepening
A critical and underappreciated driver of the STI’s re-rating has been deliberate policy intervention to deepen Singapore’s equity market. The Monetary Authority of Singapore’s (MAS) S$5 billion Equity Market Development Programme (EQDP) — with S$2.85 billion in its second batch deployed into early 2026 — created sustained institutional buying pressure and improved market liquidity.
Separately, the proposed SGX–Nasdaq dual-listing bridge, expected to go live around mid-2026, aims to reduce listing friction for Asian companies targeting simultaneous access to Singaporean and U.S. capital pools. JPMorgan’s regional outlook described these measures as catalysts that could lift Singapore’s return on equity to a historical high of 12% (versus 10% currently), and cited a S$70 billion cash pile beginning to rotate from bank deposits into equities — a potentially significant structural tailwind.
2.3 Corporate Earnings Momentum
Earnings delivery has supported valuation expansion. FY2026 STI earnings growth is forecast at 8.8%, with the banking sector — which accounts for approximately 50% of index weight — expected to turn from an earnings drag in 2025 to delivering 5.4% year-on-year growth in 2026. Singapore’s three local banks (DBS, OCBC, UOB) remain the primary engines of index performance, with resilient return-on-equity profiles and attractive dividend yields in the 4.5%–5.2% range providing a durable income anchor for institutional portfolios.
- Company-Level Analysis: 19 February Session
Rex International Holding (SGX: 5WH) — +4.14%
Catalyst Subsidiary Lime Petroleum achieved first oil production from the AK-2H well at the Seme Field Block 1 in Benin, West Africa — a material operational milestone.
Headwinds Company projected a net loss for FY2025 due to technical complications during drilling in Benin, which escalated costs and caused production delays in H2 2025.
Investor Read The 4%+ share price gain on first oil news illustrates classic event-driven market behaviour — operational milestones in junior E&P companies often trigger sharp re-ratings as production risk transforms into revenue certainty.
ZICO Holdings (SGX: 40W) — -1.39%
Announcement ZICO guided for a net profit in FY2025, a turnaround from a net loss in FY2024 — a fundamentally positive development.
Market Response Despite the positive guidance, the stock declined ~1%, consistent with the ‘buy the rumour, sell the news’ dynamic and typical thin-liquidity behaviour in smaller-cap SGX-listed names where positive guidance may already be partially priced in.
- Market Outlook: 2026 and Beyond
4.1 Analyst Consensus
The investment community has adopted a constructively positive but selectively cautious stance on Singapore equities for 2026. Key forecasts from major institutions as of early 2026 are summarised below:
Institution STI Target / View Key Thesis
DBS Research 4,880 (end-2026) Moderate gains; FY26 EPS growth of 8.8%; dividend yield of ~4.5% remains attractive
JPMorgan 6,500 (bullish case) ASEAN at inflection point; SGX-Nasdaq bridge + EQDP catalysts; ROE could reach 12%
OCBC Investment Research Overweight Undemanding valuations; forward P/E ~13.9x; dividend yields of 4.9–5.2% by 2027
Schroders Positive Asia benefits from deepening AI boom and improved global liquidity environment in 2026
4.2 Upside Drivers
Continued AI investment cycle sustaining demand for Singapore’s electronics cluster and precision engineering exports.
SGX–Nasdaq dual-listing bridge (expected mid-2026) expanding the issuer base and deepening capital market liquidity.
Rotation of an estimated S$70 billion in idle bank deposits into equity markets as institutional and retail investors seek higher returns.
Budget 2026’s emphasis on AI adoption and business transformation providing direct fiscal support to the technology and innovation ecosystem.
Sustained wealth management inflows reinforcing Singapore’s role as Asia’s premier financial hub and safe-haven destination.
4.3 Risk Factors
Net interest margin compression: Banks (50% of STI weight) face NIM declining from ~2.0% to the 1.75–1.96% range as global interest rates ease, potentially weighing on headline earnings.
Trade and tariff shocks: New U.S. tariff regimes could disrupt Singapore’s highly open economy and dampen export momentum.
Valuation risk: With much of the ‘easy’ re-rating completed in 2025, further gains will depend on mid-single-digit earnings delivery rather than multiple expansion.
Global technology volatility: The STI’s sensitivity to Wall Street technology sentiment means sharp U.S. tech corrections can transmit rapidly to Singapore equities.
Geopolitical uncertainty: Escalations in key trade corridors or supply chain disruptions could weigh disproportionately on Singapore’s transit-dependent economy.
- Economic & Market Impact
5.1 Wealth Effect and Household Finance
Singapore’s equity market rally has created a meaningful wealth effect across the population. The STI’s 22.7% gain in 2025, followed by a further 8.1% advance in the first six weeks of 2026, has materially increased household financial wealth, particularly for CPF Investment Scheme participants and retail investors. Median monthly household market income already rose 7.7% in nominal terms in 2025, and the interaction between rising financial asset values and the expanded SingStat definition capturing investment income suggests further household income growth ahead.
5.2 Singapore as a Regional Financial Hub
The sustained equity market performance has reinforced Singapore’s positioning as Asia’s premier capital market destination. Robust wealth management inflows have accelerated, with global private banks and family offices deepening their Singapore presence. The SGD’s defensive characteristics amid global political uncertainty have attracted safe-haven flows, creating a virtuous cycle in which capital inflows support the currency and market stability simultaneously.
5.3 Real Economy Linkages
The market rally reflects and reinforces real-economy dynamics. AI-driven demand for semiconductors and precision electronics has lifted Singapore’s manufacturing sector (up sharply in 2025), while sustained capital market activity has expanded employment and fee income across the financial services sector. The Budget 2026 AI adoption agenda positions Singapore to capture further value from the global technology investment cycle, with multiplier effects expected across cloud infrastructure, data centres, and professional services.
5.4 Institutional Market Structure
Perhaps the most durable impact is the structural deepening of Singapore’s equity market itself. The EQDP’s S$5 billion commitment, improved retail participation metrics, and growing interest from international institutional allocators have collectively increased market liquidity and reduced the structural discount at which Singapore equities historically traded relative to peers. This is a qualitative shift that may support sustained re-rating even as individual catalysts fade.
- Conclusion
The 19 February 2026 session encapsulates the central narrative of Singapore’s equity market at a pivotal juncture. A Wall Street technology rebound provided the immediate catalyst, but the STI’s ability to hold above 5,000 points reflects something more structural: a well-governed economy delivering 5.0% GDP growth, a banking sector with resilient profitability, an ambitious policy agenda to deepen capital market liquidity, and a macro environment that has made Singapore’s combination of dividend yield, political stability, and Asian growth exposure increasingly compelling to global allocators.
The outlook for 2026 is constructively positive, though the nature of expected returns has evolved. Having delivered exceptional gains in 2025 through multiple re-rating, the next phase of the STI’s advance will be driven by earnings delivery rather than valuation expansion. For investors, this means stock and sector selection — across banks, AI-exposed industrials, select REITs, and emerging mid-caps — will matter more than broad-market beta exposure.
Singapore’s equity market has arrived at a new structural level. The question for 2026 is not whether that level is sustainable, but how much further patient capital — rotating from deposits, attracted by dividends, and increasingly anchored by policy support — can carry it.