- Institutional Confidence: Institutions have poured S$1.4 billion into Singapore stocks, signaling a strong market outlook.
- Top Performers: Stocks like DBS, Seatrium, and Singtel are among the top beneficiaries of institutional inflows.
- Retail Caution: Retail investors remain cautious, but those stocks seeing retail outflows have performed well, averaging 17% returns in Q3.
- S-REITs on the Rise: S-REITs are back in the spotlight, with the iEdge S-REIT Index up 14.7% in Q3 following the Fed’s rate cut.
In recent weeks, Singapore’s stock market has been a hotbed of activity, driven by major policy shifts and an evolving global economic landscape. Institutional investors have been net buyers, injecting a remarkable S$1.4 billion into the market since late August, marking a complete turnaround from earlier outflows in 2024. So, what’s fueling this momentum?
The Big Picture: Policy Rate Cuts and Economic Resilience
One of the most significant drivers behind this trading surge has been the policy rate cuts by the U.S. Federal Reserve and the People’s Bank of China (PBOC). These moves, combined with stronger-than-expected ASEAN GDP growth and robust electronics demand, have positioned Singapore’s economy on an upward trajectory.
This perfect storm of favorable conditions has pushed the Straits Times Index (STI) to a 17-year high. Investors are now eyeing opportunities, with the STI’s book valuation appearing far less stretched than it was in October 2007, signaling potential for sustained growth.
Winners of the Week: Institutional Net Inflows Boost Top Stocks
Leading the charge are Singapore’s blue-chip companies, with DBS, Seatrium, and Singtel seeing the highest net inflows from institutional investors. These companies are benefiting from renewed investor confidence, with DBS alone witnessing a net inflow of S$485.7 million between August 30 and October 9. Seatrium, in particular, has been a standout, delivering a staggering 40.7% total return during the same period, backed by a net inflow of S$179.6 million.
Note: TR refers to total Return, ADT refers to Average Daily Trading Turnover; NIF refers to Net Institutional Inflow;Source: SGX, Refinitiv (Data as of 9 Oct 2024).
This wave of institutional activity highlights the bullish sentiment in the market, with significant inflows into stocks like Sembcorp Industries and OCBC, further boosting overall market performance.
Structured Warrants Hit Record Highs
October 9 marked a notable day for Singapore’s Structured Warrants market, with the highest trading turnover since January 2019. This surge was largely driven by significant moves in markets tracking the Hang Seng Index, as investors sought to capitalize on market volatility. At the same time, Singaporean stocks with strong exposure to Greater China have averaged impressive returns of 22% since September 20, mirroring the gains seen in China’s FTSE A50 and CSI 300 indices.
Retail Investors Take a Different Approach
Interestingly, while institutional investors are diving headfirst into the market, retail investors have been more cautious. In the third quarter of 2024, retail investors net sold S$955 million worth of Singapore-listed stocks, especially in September. However, those stocks with the most net retail outflow have still performed well, averaging a 17% gain for the quarter.
Meanwhile, stocks with significant net retail inflows in September underperformed, with an average return of just 2%. This disparity highlights the importance of timing and strategic stock selection for retail investors in a fast-moving market.
S-REITs Shine as the Fed Cuts Rates
Another standout performer has been Singapore’s Real Estate Investment Trusts (S-REITs). The sector experienced a strong rally following the Federal Reserve’s rate cut, with the iEdge S-REIT Index logging a remarkable 14.7% return in Q3, its best performance since its inception in 2010. With the REIT ETF market surpassing S$1 billion in assets under management (AUM), S-REITs are increasingly seen as a go-to for investors looking to capitalize on lower interest rates.
What’s Next for Singapore’s Market?
Looking ahead, the combination of resilient economic growth, policy rate cuts, and strong institutional interest suggests that Singapore’s stock market is poised for further gains. Investors, both institutional and retail, will be closely watching market movements, particularly in sectors like banking, energy, and REITs, where opportunities abound.
The coming weeks could bring even more trading activity, especially as global economic policies evolve. Whether you’re an experienced investor or just getting started, now is the time to stay engaged and keep a close eye on market dynamics.
Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.
