Singapore banks displace chip stocks in July rally

Oversea-Chinese Banking Corporation delivered a 17.5% total return and led the benchmark.

Singapore's banks drove the Straits Times Index (STI) to its strongest monthly gain in more than five years in July, as investors shifted towards financial stocks and away from semiconductor shares that had led the market earlier this year.

The three local banks were the biggest contributors to the rally, with the FTSE ST Financials Index recording its strongest monthly gain since November 2020, according to the latest monthly market review by the Securities Investors Association (Singapore).

Bank stocks rose an average of 13.3% during the month, helping lift the STI 8.8% to mark its best monthly performance since November 2020, data from SGX Group showed.

The benchmark index also reached a record high of 5,713.19 on 29 July, after breaking through the 5,200 to 5,700 levels within weeks.

Although the STI slipped below 5,700 towards the end of the month, it still ended July with one of its strongest performances in decades.

DBS Group Holdings climbed above $54.6 (S$70) for the first time and reached a record closing high of $58.5 (S$75) during the month. 

Oversea-Chinese Banking Corporation (OCBC) rose to $23.23 (S$29.78), whilst United Overseas Bank (UOB) traded as high as $34.23 (S$43.89).

Their combined weighting in the STI made them the main drivers of the benchmark's gains.

OCBC was also the top-performing STI constituent in July. Amongst stocks with market capitalisations above $0.8b (S$1b), Great Eastern Holdings, Pan-United and OCBC were the strongest performers, delivering total returns of 34.6%, 19.3% and 17.5%, respectively.

Financial stocks benefited as investors rotated out of semiconductor-related shares, which had been amongst the market's strongest performers in the first half of 2026.

Banks, real estate investment trusts, property and transport stocks emerged as July's leading sectors instead.
Singapore outperformed several North Asian markets because of its larger weighting in financial, industrial and transport stocks.

Investors are now turning their attention to the banks' first-half 2026 earnings this week to see whether high non-interest income and loan growth have continued to offset pressure from lower domestic interest rates.

Despite the strong share price gains, DBS recorded the second-largest institutional outflow in July, which market analysts attributed to portfolio rebalancing after the stock's index weighting increased following its sustained outperformance.

Overall, institutions were net sellers of $361.9m (S$464m) during the month, whilst retail investors remained net buyers, purchasing $425.1m (S$545m) worth of Singapore shares.

The STI's gains also boosted longer-term returns. Since the end of 2019, STI exchange-traded funds have delivered an annualised total return of 13.1%, whilst monthly dollar-cost averaging into STI ETFs generated an indicative compound annual growth rate of 10.7% over the same period.

($1.00 = S$1.28)