CASE STUDY
26 February 2026 | Straits Times Index (STI) | Singapore Exchange (SGX)
- Executive Summary
On 26 February 2026, Singapore’s benchmark equity index, the Straits Times Index (STI), closed at 4,964.38 — a decline of 43.35 points, or 0.87% — extending a multi-session losing streak driven by investor anxieties over imminent U.S. tariff escalations. This case study examines the confluence of external trade policy uncertainty and robust domestic macroeconomic fundamentals, and analyses the implications for institutional and retail investors operating within Singapore’s equity markets.
Despite the market-wide sell-off, select counters demonstrated significant resilience and outperformance, underscoring the importance of sector-level and company-specific analysis in volatile market environments.
Metric Value
STI Closing Level 4,964.38
Change (Points) -43.35
Change (%) -0.87%
Intraday Range 4,958.29 – 5,027.22
Manufacturing Output Growth (Jan YoY) +16.6%
FDI in Corporate Sector (end-2024) SG$3.130 trillion (+9.5% YoY)
AEM Holdings (AWX) Daily Move +21.7%
Seatrium (5E2) Daily Move +3.0%+
China Aviation Oil (G92) Daily Move +~1.0%
- Background and Context
2.1 Singapore as a Trade-Dependent Economy
Singapore’s economy is structurally characterised by a high degree of openness, with total merchandise trade typically exceeding 300% of GDP. The city-state functions as a critical regional hub for financial services, logistics, and advanced manufacturing. Consequently, shifts in global trade policy — particularly those emanating from the United States, Singapore’s third-largest trading partner — exert a disproportionate influence on investor sentiment and equity valuations.
2.2 The U.S. Tariff Policy Environment
By early 2026, U.S. trade policy had re-emerged as a principal source of global economic uncertainty. The administration’s signals of broad-based tariff increases — targeting both manufactured goods and semiconductor-related supply chains — created an environment of heightened risk aversion among institutional investors with Asia-Pacific exposure. Singapore, as a key node in global electronics and precision engineering supply chains, faced particular scrutiny from market participants.
2.3 The Straits Times Index (STI)
The STI is a capitalisation-weighted index comprising 30 of the largest and most liquid companies listed on the Singapore Exchange (SGX). As a barometer of corporate Singapore, the index is heavily influenced by financial services (DBS, OCBC, UOB), real estate investment trusts (REITs), and industrial conglomerates. Its sensitivity to external trade developments and U.S. dollar movements makes it a useful indicator of regional risk appetite. - Market Analysis: 26 February 2026
3.1 Price Action and Trading Dynamics
The STI opened at approximately 5,027.22 — the intraday high — before trending lower throughout the session, ultimately finding a trough near 4,958.29. The downward trajectory reflected a broad-based risk-off posture, with sellers dominating across most large-cap constituents. The index closed at 4,964.38, representing a loss of 0.87% on the day and continuing what market participants characterised as a multi-session losing streak.
The intraday high-to-low range of approximately 69 points (1.38% of opening price) indicated elevated volatility relative to the index’s historical average daily range, consistent with an environment of heightened macro uncertainty.
3.2 Contributing Factors
External: U.S. Tariff Policy
The proximate catalyst for continued selling pressure was investor concern over looming U.S. tariff announcements. Tariffs on electronics and semiconductor components would directly affect Singapore-listed companies with upstream or downstream exposure to these supply chains. The uncertainty premium embedded in equity prices was reflected in compressed valuations across cyclical sectors.
External: Broader Market Contagion
Regional equity markets similarly registered weakness, as the tariff narrative intersected with broader global risk-off dynamics. Portfolio rebalancing by institutional investors away from Asian equities contributed to capital outflows, amplifying domestic selling pressure.
Domestic: Positive Macroeconomic Divergence
Notably, the equity market decline occurred against a backdrop of materially positive domestic economic data — a divergence that is analytically significant. Manufacturing output expanded 16.6% year-on-year in January 2026, driven by broad-based improvements across production clusters. Separately, FDI in Singapore’s corporate sector reached SG$3.130 trillion as at end-2024, an increase of 9.5% year-on-year, signalling continued confidence in Singapore’s investment climate among multinational corporates.
This divergence between strong fundamentals and weak equity performance is characteristic of periods where macro sentiment overrides earnings-based or intrinsic valuation frameworks. - Corporate Performance: Outperformers
Despite the index-level weakness, three companies delivered significant positive returns on the day, each supported by strong second-half 2025 earnings results.
4.1 AEM Holdings (SGX: AWX) — +21.7%
AEM Holdings, a semiconductor test equipment manufacturer, surged nearly 22% following the release of H2 2025 results. Attributable profit rose 32% to SG$13.9 million, from SG$10.5 million in H2 2024. The result exceeded market expectations and demonstrated AEM’s recovery trajectory following a period of inventory destocking in the global semiconductor industry. The magnitude of the single-day re-rating reflects the compression of expectations that had been embedded in the share price heading into results season.
4.2 Seatrium (SGX: 5E2) — +3.0%+
Seatrium, the integrated marine and offshore engineering group formed from the merger of Sembcorp Marine and Keppel Offshore & Marine, reported H2 2025 attributable profit of SG$179.3 million — a 48% increase from SG$120.9 million in H2 2024. The result reflected continued demand for offshore energy infrastructure and the successful execution of cost synergies from the corporate integration. The share price response validated the market’s recognition of Seatrium’s improving operational leverage.
4.3 China Aviation Oil (SGX: G92) — +~1.0%
China Aviation Oil (Singapore), the dominant jet fuel procurer for Chinese airports, reported a 68% increase in H2 2025 attributable profit to US$60.5 million, from US$36.0 million in the prior-year period. The result was attributable to the sustained recovery in international air travel across Asia-Pacific and improved supply chain management. The modest share price response relative to earnings growth may indicate that the market had partially priced in the recovery. - Analytical Framework: The Macro-Market Paradox
The events of 26 February 2026 present a textbook illustration of what may be termed the ‘macro-market paradox’ — a scenario in which positive domestic macroeconomic data fails to provide support for equity markets due to the dominance of exogenous sentiment drivers.
Several theoretical frameworks are useful in interpreting this dynamic:
Expectations Theory: Equity prices are forward-looking. If investors believe that tariff impacts will materialise in future earnings, current positive data releases may be discounted as lagging indicators.
Risk Premium Compression: During periods of elevated global uncertainty, investors demand higher risk premia for holding equities, depressing valuations independently of earnings outcomes.
Capital Flow Dynamics: Institutional portfolio rebalancing — particularly from risk-on to risk-off assets — can overwhelm domestic buying interest, creating price declines disconnected from fundamental value.
Trade Sensitivity Amplification: As a highly open economy, Singapore’s equity market is particularly susceptible to trade policy uncertainty, creating an asymmetric sensitivity relative to more domestically-oriented markets. - Outlook
6.1 Near-Term (1–3 Months)
The near-term trajectory of the STI is likely to remain contingent on developments in U.S. trade policy. Key variables include the scope and timeline of proposed tariff implementations, retaliatory measures from trading partners (particularly China), and the Federal Reserve’s policy response to any tariff-induced inflationary pressures. A deterioration in the U.S.-China trade relationship would carry particularly adverse implications for Singapore-listed companies with dual exposure to both economies.
Technically, the STI’s breach of the 5,000 level is likely to trigger reassessment of support levels by technical traders, potentially adding short-term selling pressure. A sustained recovery would require either a policy catalyst (e.g., tariff rollback or exemption) or a rotation by investors back into fundamentals-driven valuation frameworks.
6.2 Medium-Term (3–12 Months)
The medium-term outlook is more constructive, premised on Singapore’s strong underlying fundamentals. The 16.6% manufacturing growth and robust FDI inflows suggest that the real economy remains resilient. Assuming no severe escalation in trade hostilities, corporate earnings for Singapore-listed industrials and financial services companies are likely to remain supportive of valuations. The REITs sector, while sensitive to interest rates, may offer defensive characteristics if global risk aversion persists.
Structural tailwinds — including Singapore’s positioning as an AI and data centre hub, its role in supply chain diversification for U.S.-aligned multinationals, and the continued growth of ASEAN consumption — provide a durable foundation for equity market recovery.
6.3 Sector-Specific Outlook
Sector Stance Key Considerations
Semiconductors / Tech Cautious Tariff risk to supply chain; but structural demand intact
Marine & Offshore Constructive Energy capex cycle; Seatrium operational leverage
Financial Services Neutral Rate sensitivity; credit quality monitoring required
Aviation / Fuel Constructive APAC travel recovery; China aviation demand growth
REITs Neutral-Defensive Interest rate sensitivity; income characteristics attractive
Manufacturing / Industrials Constructive 16.6% output growth; FDI inflows supportive - Impact Assessment
7.1 Investor Implications
For long-only institutional investors, the current environment warrants a differentiated approach. Index-level weakness driven by macro sentiment may create selective entry opportunities in companies with strong earnings trajectories, particularly those that demonstrated resilience or outperformance on 26 February (e.g., AEM, Seatrium). Earnings visibility, balance sheet strength, and limited direct tariff exposure should be prioritised as screening criteria.
For retail investors, the persistence of the losing streak may present both risk and opportunity. Dollar-cost averaging strategies in diversified SGX-listed vehicles (e.g., STI ETFs) may be appropriate for those with long investment horizons, given the supportive macroeconomic backdrop.
7.2 Corporate Implications
Singapore-listed corporates with material U.S. export revenues or those embedded in global electronics supply chains face the greatest earnings risk from tariff escalation. Companies should be proactively modelling tariff scenarios in their forward guidance and investor communications. Supply chain diversification, hedging strategies, and operational efficiency improvements will be key levers for earnings protection.
7.3 Macroeconomic Policy Implications
From a policy standpoint, the divergence between robust macroeconomic fundamentals and equity market weakness creates a communication challenge for Singapore’s Ministry of Trade and Industry (MTI) and the Monetary Authority of Singapore (MAS). Maintaining investor confidence in Singapore’s economic narrative — particularly the strong FDI and manufacturing data — will be important in anchoring medium-term market sentiment. MAS’s exchange rate-based monetary policy framework provides some insulation from imported inflation should tariffs lead to global price pressures. - Conclusion
The STI’s decline on 26 February 2026 encapsulates a broader challenge facing open, trade-dependent economies in the current global environment: the disconnect between strong domestic fundamentals and externally-driven investor risk aversion. Singapore’s manufacturing growth of 16.6% and FDI expansion of 9.5% represent genuine economic strength, yet the market’s forward-looking mechanism assigned greater weight to the uncertainty embedded in U.S. tariff policy.
The outperformance of AEM Holdings, Seatrium, and China Aviation Oil illustrates that company-specific earnings catalysts retain their power to generate alpha even in adverse macro environments. This reinforces the value of fundamental, bottom-up analysis as a complement to macro-driven portfolio positioning.
Looking ahead, the resolution of U.S. tariff policy uncertainty — whether through negotiated outcomes, exemptions, or formal agreements — will be the critical variable determining the STI’s trajectory. Singapore’s structural advantages as a global financial and trade hub, supported by its strong rule of law, workforce quality, and strategic geography, provide a durable foundation for equity market recovery once sentiment stabilises.
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Disclaimer: This case study is prepared for academic and informational purposes only. It does not constitute investment advice or a recommendation to buy or sell any security. All data is sourced from publicly available reports as of 26 February 2026.