UOB Kay Hian
Date of Report: 27 May 2025

Singapore Market Outlook 2025: Top Stocks to Watch as S\$5 Billion Boost Sparks Mid-Cap Rally

Introduction: Singapore Market Set for Growth Amid Tariff Relief and MAS Support

Singapore’s stock market is poised for a strong performance in 2025, buoyed by the US de-escalation of tariffs and an anticipated liquidity injection by the Monetary Authority of Singapore (MAS). UOB Kay Hian forecasts a revised year-end Straits Times Index (STI) target of 4,054, up from 3,720, with both large-cap blue chips and select mid-cap stocks expected to benefit from market tailwinds, including the upcoming S\$5 billion Equity Market Development Programme (EQDP).

Strategic Overview: Defensive Blue-Chips and a S\$5b Mid-Cap Blitz

• The STI has outperformed regional peers year-to-date by 3-16 percentage points, thanks in large part to defensive blue-chip stocks with robust cash flows and high dividend yields.
• The S\$5b EQDP, set for deployment in late 2025, will focus on non-index, domestically oriented mid-cap stocks, aiming to enhance liquidity and attract greater investor interest.
• MAS’s program is designed to strengthen Singapore’s position as a leading Asian financial hub, reversing a decade-long decline in trading activity and a wave of delistings outpacing IPOs.
• REITs are not expected to be primary beneficiaries of this liquidity drive.

STI 2025 Target and Valuation Metrics

• Year-end STI target: 4,054 (up from 3,720), implying a ~5% upside from current levels.
• Forecasted 2025 earnings growth for index stocks: 1.2%.
• Implied 2025 PE: 13.4x, seen as reasonable for high-quality, defensive Singapore stocks.
• Current 2025 forward PE and P/B: 12.2x and 1.3x, with dividend yields above 5.5%—discounts to long-term averages and to regional peers.

Large-Cap Picks: Leaders in Defensive Growth

Mid-Cap and Small-Cap Picks: Poised for Outperformance

Key Companies and Rationale

Peer Comparison: Key Financial Metrics for Mid/Small-Caps

Sectoral Analysis: Sector Leaders and Noteworthy Performers

• Construction & Engineering: Centurion and Hong Leong Asia are set to benefit from Singapore’s construction upcycle, with Centurion’s assets enjoying inelastic demand and HLA eyeing profit growth on regional infrastructure demand.
• Technology: Frencken and Valuetronics are positioned to capitalize on an improving semiconductor outlook and the AI boom, with Valuetronics also expanding in Vietnam and holding over 73% of market cap as net cash.
• Consumer & Retail: Sheng Siong’s aggressive store expansion (six new openings in 2025) and strong management underpin volume growth. Food Empire’s smart cost management and geographic expansion in Vietnam and Central Asia are cushioning against high coffee prices.
• Transport & Logistics: ComfortDelGro’s defensive model, with robust overseas growth and a generous 6.1% yield, and SIA Engineering’s strong MRO demand amid limited tariff exposure, are highlighted.
• Property: PropNex is forecasted to deliver strong results in a favorable market, with a special dividend potential on the table.

Valuation: Premiums, Discounts, and Market Capitalization

Most selected mid-caps are trading at a significant discount to both emerging and developed market peers, both on PE and EV/EBITDA bases. Net cash positions are strong across the board—19 small/mid-caps covered hold net cash ranging from 6% to 73% of their market capitalization.

MAS Equity Market Development Programme (EQDP): Objectives and Execution Timeline

• The S\$5b EQDP will be allocated to selected fund managers, with proposals due by 30 May. The shortlist will be announced in Q3 2025, and fund deployment could start as early as Q4 2025.
• The focus is on non-index stocks, with actively managed strategies preferred. REITs are likely excluded from primary consideration.
• Singapore aims to revitalize its stock market, which has seen waning quality and activity, by targeting higher liquidity and valuations in the non-index segment, encouraging future IPOs.
• Market makers were not included in the latest liquidity initiative—a gap that authorities may need to address for sustained liquidity improvement.

Peer Comparable Companies: Large-Cap Financials, Industrials, and REITs

Conclusion: Singapore’s Market Renaissance Driven by Defensive Quality and Mid-Cap Momentum

The Singapore market is entering 2H25 with renewed optimism, thanks to defensive quality in the STI, supportive government policy, and a liquidity boost targeting overlooked mid-caps. Investors should closely watch the deployment of the S\$5b EQDP, as it could catalyze a rerating in select non-index names while the blue-chip stalwarts continue to anchor the local bourse with stability, yield, and growth.

Contact the Analysts

• Adrian Loh, +65 6590 6633, adrianloh@uobkayhian.com
• John Cheong, +65 6590 6623, johncheong@uobkayhian.com
• Singapore Research Team, +65 6535 6868, Research@uobkayhian.com