Major SG stocks index could hit 560 points after August pullback: CGS

The SIMSCI gained 3.55% in August despite the Middle East conflict.

The MSCI Singapore Free Index (SIMSCI), a benchmark for major listed stocks, is expected to reach 560 points over the next six months after only a mild correction in August, with market indicators pointing to further gains, according to CGS International.

The index gained 3.55% in August to close at 541.99 points, as markets remained resilient despite the Middle East conflict, higher oil prices and rising US Treasury yields.

However, the outlook differs from CGS’ fundamental year-end view. The brokerage maintained its 2026 SIMSCI target of 520 points, based on a 17-times forward price-to-earnings ratio.

This comes as equities traded near record levels in August. The Straits Times Index reached a record 5,774.21 points on 11 August and ended the month 2.3% higher, although SGX said further gains would increasingly depend on companies delivering earnings. 

The market’s second-quarter earnings season was slightly positive, with 17 companies beating expectations compared with 13 that fell short, whilst 38 reported results broadly in line with forecasts. 

Construction, property and REITs were the strongest earnings performers, whilst capital goods, manufacturing and transport lagged.

The broader economic backdrop was also mixed. Singapore’s non-oil domestic exports rose 24.2% year on year in July, accelerating from 20.8% in June, but the increase was largely driven by electronics.

Electronics exports surged 112%, led by disk media products, personal computers and integrated circuits, whilst non-electronics exports fell 2.3% as shipments of pharmaceuticals, petrochemicals and food preparations declined.

At the same time, inflation picked up, with headline inflation rising to 2.2% in July from 1.9% in June and core inflation increasing to 2% from 1.6%. CGS attributed the increase to higher electricity and gas, services, food and accommodation costs.

Investor flows also showed differing views of the market. Institutional investors were net sellers for four consecutive weeks, mainly reducing exposure to financials, REITs and telecommunications stocks.

Retail investors, however, were net buyers each week, with inflows concentrated in financials, REITs, and healthcare.

The divergence was also visible across sectors. Agribusiness gained 14.49% in August, followed by internet stocks at 3.73% and financials at 0.99%, whilst transport fell 10.62%, consumer stocks declined 4.88%, and construction dropped 4.62%.