SiMSCI Futures poised for gains as Singapore equities shine
THE SiMSCI Index (MSCI Singapore Free Index) Futures contract is a derivative instrument based on the SiMSCI Index, which tracks performance of the large- and mid-cap segments of the Singapore market. The index consists of 17 constituents and covers roughly 85 per cent of the free float-adjusted market cap of the Singapore equity universe. As at Jul 31, the top six constituents include Singapore’s three local banks (DBS, OCBC, UOB), Singtel, and international-listed companies such as Sea and Grab.
Meanwhile, the SGX MSCI SiMSCI Futures contract remains the most liquid equity index futures contract on the Singapore market. As at market close on Aug 26, and in SGD terms, the SiMSCI Index gave a total return of 23.35 per cent year-to-date, outperforming the Straits Times Index’s return of 16.64 per cent year-to-date.
On Aug 14, the STI hit its all-time high of 4,282.80. From a macro perspective, we maintain a constructive view on Singapore equities, supported by compelling valuations, robust sovereign fundamentals, and favourable policy catalysts.
Singapore’s reciprocal tariff of 10 per cent is the lowest among most Asian peers. At the same time, the country has the only triple-A rated sovereign credit rating in Asia, conferring safe haven status. Valuations appear compelling on both a relative basis and absolute basis. At 16.6x Last Twelve Months P/E ratio, the SiMSCI trades at an approximate 40 per cent discount to the S&P 500’s 27.5x and below its own five-year average of 18.0x. Meanwhile, a 12-month yield of approximately 3.8 per cent looks attractive given falling interest rates.
Investor enthusiasm has been further lifted by MAS’ planned S$5 billion Equity Market Development Programme, designed to deepen market liquidity and broaden institutional participation - a likely structural tailwind for local equities. Corporates are also leaning towards improving shareholder returns through higher dividends and share buybacks.
Bloomberg data indicates the SiMSCI tilts more towards growth and volatility versus the STI, making it a preferred vehicle for investors seeking higher-growth and higher-beta exposure among Singapore equities.
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In the longer run, we expect the 3M-SORA to continue declining as Fed rate cuts are expected. Key risks include potential volatility in interest rates if the Federal Reserve’s independence comes under political scrutiny. Nonetheless, even if such a scenario materialises, Singapore’s safe haven status should provide relative resilience.
SiMSCI Index Futures technical outlook
The daily chart of the SiMSCI Index Futures Contract shows the contract having rebounded from its Apr 6 low of 327.50. Using Fibonacci extensions anchored at the August 2024 low, March 2025 high, and April 2025 low, our year-end price target stands near the 123.6 per cent extension at 490.
The contract broke above the 76.4 per cent extension level on Aug 13 following strong earnings from top constituent Sea, whose shares jumped by 19.07 per cent in a single session.
Looking ahead, a daily close above 460 would confirm further upside continuation, while sustained trade below 420 (50-Day Moving Average) would negate the bullish setup. Immediate support lies around the 50-DMA of 420 while near-term resistance lies around 460, coinciding with the 100 per cent extension level.
Technically, a sustained breakout above 460 (100 per cent Fibonacci extension) would open the path towards 490, while support holds at the 50-DMA near 420. With the 14-day RSI near 64, conditions are approaching overbought. Therefore, we see room for near-term consolidation, though the broader trend remains constructive.
The writer is senior investment analyst at Phillip Nova
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