Brokerages lift their STI targets as earnings drive momentum into Q4
DBS Group Research, for example, expects the STI to be at 5,850 points by the end of 2026
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[SINGAPORE] With the final quarter of 2026 almost here, some brokerages have raised their targets for Straits Times Index (STI), reflecting a growing optimism underpinned by solid corporate earnings and macroeconomic resilience.
The consensus 12-month target for the STI now stands at 6,140 points, implying about a 5.5 per cent upside, SGX market strategist Geoff Howie wrote in an Aug 27 note.
He noted that this shift shows that price targets based on individual company fundamentals have finally caught up with the more ambitious macroeconomic forecasts of the past year.
The STI closed at 5,801.96 points at the close of the trading week on Friday (Sep 4).
With the index up around 25 per cent since the end of last year, analysts have consistently raised their targets as the market climbed, he said. While analysts pegged the index at 15 to 19 per cent below its fair value in 2022 and 2023, the landscape is different today.
The recent upside came primarily from companies earning more, rather than the market simply being cheap, said Howie in his note. This followed the heavyweight banks lifting their forward targets and strong broad earnings delivery.
Here is a roundup of where key brokerages stand on the STI over the next 12 months:
Maybank (12-month target: 6,800)
Thilan Wickramasinghe, head of research at Maybank, outlines a bull-case 12-month target of 6,800 points.
The firm expects the intersection of Singapore’s stability premium, large-cap reforms and small-to-mid-cap value unlocking to drive this upside.
The increasing liquidity momentum of the Equity Market Development Programme (EQDP) is also projected to push valuations higher over this period.
UOB Kay Hian (12-month target: 6,682)
UOB Kay Hian analysts on Aug 25 set a target of 6,682 points, which represents an 18 per cent upside for the STI.
This target implies a fair 2026 forward price-to-earnings (PE) ratio of 18.2 times.
The brokerage grounds this valuation on a risk-free rate of 2.5 per cent and an equity risk premium of 3 per cent, which it says is currently one standard deviation below its long-term average.
DBS Group Research (12-month target: 6,110)
DBS on Monday (Aug 31) introduced a 12-month target of 6,110 points, applying a 5 per cent discount to the aggregated bottom-up target of 6,430 points, while simultaneously raising its year-end target to 5,850 points.
This upgrade is supported by higher target prices for index heavyweight banks and broad earnings delivery observed during the H1/Q2 results season.
While Singapore equities benefit from stronger gross domestic product growth, attractive dividend yields, a safe-haven status and MAS support, DBS believes further upside will be earnings-driven rather than from multiple expansion, as the STI already trades at a premium 16.7 times forward PE.
Macquarie Group (12-month target: 6,000)
Jayden Vantarakis, head of Asean equity research at Macquarie Group, in July upgraded his 12-month target for the STI to 6,000 points, implying a 14 per cent total market return when factoring in a 4.1 per cent dividend yield.
The target is anchored by an anticipated index earnings growth of 8 per cent next year, alongside stock-specific upside across its coverage.
Macquarie notes that strong economic growth, driven by high-value manufacturing sectors and services expansion, translates to a highly supportive environment for corporate earnings.
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