Singapore Equities Booster Shot - OCBC Investment Research 2025-09-25: iEdge Singapore Next 50 Indices

• SGX unveiled the iEdge Singapore Next 50 Indices, which aim to track the performance of the next 50 largest companies listed on the SGX Mainboard, excluding the 30 companies with the largest market capitalisations. This includes the
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  • iEdge Singapore Next 50 Liquidity Weighted Index.
• The index covers, cumulatively, a market capitalisation of S$42.3b as per the factsheet dated 29 Aug 2025, with the largest sectors being Real Estate, Industrials, and Financials.
• Backdated total returns of the index have outperformed both the MSCI Singapore Index and the STI for four out of the 10 years from 2015 to 2024.
• On a year-to-date basis, the index has outperformed the STI, but underperformed the MSCI Singapore Index marginally based on last close prices as at 23 Sep 2025.

Investment implications.

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• There is a possibility that some fund managers may adopt the index as a benchmark or launch cost-effective vehicles (e.g. ETFs) to track the index, which may spur a virtuous cycle of investor interest beyond STI constituents and blue chip names, further boosting liquidity and lifting valuations.
• That being said, many SMIDs have already experienced sharp share price rallies year-to-date, in part due to pre-emptive positioning ahead of EQDP fund deployment.
• While some may argue that the ongoing revitalisation of the Singapore equities market may support SMIDs to trade at valuations above historical averages (i.e. a new normal), we would advocate for caution as it is still unclear to us if the ongoing re-rating is sustainable.

Risk/reward ratios are starting to look unattractive

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Above is an excerpt from a report by OCBC Investment Research.
Clients of OCBC Securities may be the first to access the full PDF report @ https://www.iocbc.com/.

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