When will STI meet resistance?

The STI has been on a bull run lately, buoyed by the 3 big bank's stocks, as well as Singtel.

Here are the reasons:

1. Dominance and Record Results of Local Banks

DBS, UOB, and OCBC, Singapore’s major banks, form over half the index’s weight and have posted record profits. For example, DBS reported a record net profit of S$11.3 billion, with both net interest and non-interest income rising. Higher-for-longer interest rates have boosted banks’ net interest margins, and all three banks have increased their dividend payouts, further attracting investor demand.

Positive bank earnings are particularly significant as the trio now makes up over 50% of the STI, so gains here strongly lift the entire index.

2. Singapore’s Appeal as a Safe Haven

Amid global market volatility—stemming from policy uncertainty in the US, China’s growth deceleration, and geopolitical risks—Singapore’s reputation as a stable and defensive investment destination has drawn in regional and international funds. Singapore is now ranked just behind India as a prime investor preference in Asia.

The STI has benefited from substantial foreign capital inflows, looking for safety and resilience.

3. Robust Economic Growth

The Singapore economy posted above-trend GDP growth—4.4% in 2024 and an estimated 3.8% year-on-year growth in Q1 2025. Strong economic fundamentals have supported higher corporate earnings and investor optimism.

4. Strong Performance from Non-Banking Blue-Chips

Companies like Singtel have shown substantial share price increases, with consistent growth in profits and dividends. Industrial firms and select REITs, such as CapitaLand Ascendas REIT, have also delivered solid results, contributing to broad-based gains across the index.

Strategic reforms to improve market liquidity and sector performance—particularly in banking, industrials, and telecom—have fueled confidence and are seen as unlocking further upside in the STI.

5. Dividend and Share Buyback Trends

Growth in dividends from major stocks and active share buyback programs (for example, major bank buybacks) are adding to total shareholder returns, making the STI more attractive to yield-seeking investors.

6. Supportive Global and Regional Trends

Global uptake in equities, especially defensive blue-chips, followed a period of outperformance by Asian markets like Singapore and Hong Kong.

Lower-than-expected inflation data and a more gradual pace of US Fed rate cuts have further stabilized investor sentiment.

7. Rotation from Money-Market Funds into Equities in 2025

Historically High Money-Market Fund Balances: As of the first half of 2025, assets in U.S. money-market funds reached a record $7 trillion. This followed several years of strong inflows, reflecting investor caution amid high interest rates and significant global uncertainty.

Outflows and Shifts: Recent months have seen notable outflows from money-market funds and increased inflows to risk assets, especially as expectations for interest rate cuts have mounted and equity markets have rallied. For example, in May 2025, European MMFs saw significant outflows (over €10 billion), matched by strong inflows into equity funds (+€23.8 billion for the month).
There is also a currently ongoing rotation of money from money-market funds into equities.

The STI reached another all-time high as of today 15 July 2025, at 4129.77.

I was curious when it would start to fall, and based on the charts, it seems STI will meet some resistance at 4,165.

I keep a record here in this post, time will tell whether the prediction is correct.