[SINGAPORE] Macquarie upgraded its 12-month target for Singapore’s benchmark Straits Times Index (STI) to 6,000, pointing to a “healthy cocktail” of macro economic tailwinds, rising domestic interest rates, and supportive government market initiatives.

In a Wednesday (Jul 15) note, the financial services firm said that the new target implies a 14 per cent total market return from the index level of 5,470 as at the time of the report, when factoring in the STI’s 4.1 per cent forward dividend yield.

If the index reaches 6,000, stocks would once again offer the same typical income advantage over 10-year Singapore government bonds that investors have seen over the long run—about 1.74 percentage points.

Strong macro performance bullish for index earnings

Advanced gross domestic product (GDP) estimates released by the Ministry of Trade and Industry (MTI) showed the economy expanded by 5.7 per cent year-on-year in the second quarter of 2026, Macquarie noted.

This tracks significantly ahead of MTI’s full-year growth forecast of 2 to 4 per cent.

“This is on the back of strong tech manufacturing activity and sustained services sector growth,” analysts said.

The manufacturing sector experienced a 12.2 per cent year-on-year surge, driven by higher electronics and precision engineering output, supported by strong AI-related semiconductor demand.

Rising interest rates to lift index-heavy banks

Financials account for 59 per cent of the STI.

“Where financials go, the market goes,” Macquarie said.