- We lift STI’s end-2026 target to 5,250 (7% upside), pegged at 15.3X (+1.25 standard deviation) FY27F P/E, reflecting our +2.1% revision to FY27F earnings. The higher year-end target assumes that the current Middle East tensions will be short-lived and not lead to major market disruption.
Stock market bull run checked by unfolding Middle East war
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- Past geopolitical conflicts have triggered short-term drawdowns in global equity markets. In a contained escalation scenario, declines have typically averaged 6-7% over roughly 60 days. As the situation remains highly fluid, we highlight the following observations –
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- Elevated oil prices are negative for energy-intensive transport stocks (e.g., SIA, ComfortDelGro)
- Uncertainty around the Fed outlook and renewed inflation fears may weigh on REITS and property stocks but to a lesser extent – REITs currently trading around 5% yield are CapitaLand Integrated Commercial Trust, Frasers Centrepoint Trust, Keppel DC REIT, Keppel REIT.
- Technology stocks riding on AI exposure (e.g. AEM, UMS) have outperformed despite initial concern about profit taking on risk-off trades.
Sector tariff uncertainties offset lower global tariffs.
Tariff volatility has returned too.
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