Singapore Equity Strategy - OCBC Research 2026-07-02: Constructive On 2H26 Outlook

• Equities completed 1H26 on a positive note, despite geopolitical uncertainties and higher oil prices and the resulting inflationary concern. The powerful AI investment theme was at the centre of this rally, pushing US, Japan, Korean and Taiwanese equities higher. Moving forward, the mega AI investment theme remains relevant and will continue to support interest in the market, but focus will shift to earnings and the differentiation among participants. Companies with robust earnings, supported by ongoing investment and expanding revenue, are likely to be favoured. High valuations are likely to persist, though further multiple expansion may be limited.

Overweight on Singapore remains

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Investment highlights

After a tumultuous first half, will the market enjoy sunny days ahead?

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• On the geopolitical front, it felt like Groundhog Day, as the situation in the Middle East changed rapidly and regularly and that led to heightened volatility as measured by the CBOE Volatility Index (VIX) which moved from 15 at the start of the year to a high of 35 in March 2026, before stabilising currently at around 16 currently. The Middle East situation led to a sharp spike in oil prices, which hit a recent high of US$126/bbl, before settling recently down to US$73/bbl. Market concerns of an energy crisis have been averted for now, but with AI investments pushing ahead, consumption of energy will continue to rise.

AI-driven earnings upcycle

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Carmen Lee OCBC Group Research | Andy Wong CFA OCBC Group Research | Rachel Miu OCBC Group Research | https://www.iocbc.com/ 2026-07-02

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