‘Sweet spot’ in 2026: Maybank lists top picks among Reits and stocks to tap yield and growth

[SINGAPORE] Singapore’s equity market is entering a “sweet spot” in 2026, supported by a rare convergence of macro resilience, structural reforms and attractive valuations, said Maybank.

In a strategy report released on Jan 12, the brokerage raised its target for the Straits Times Index (STI) to 5,600 points.

Maybank analyst Thilan Wickramasinghe highlighted that Singapore could command a widening “certainty premium” compared to its more volatile global peers.

“Renewed large-cap reforms can accelerate capital returns, while small and mid-caps (SMIDs) remain inexpensive,” he noted.

He added that the implementation of reforms by the Monetary Authority of Singapore (MAS) and directed liquidity from the Equity Market Development Programme (EQDP) should drive “significant value unlocking”.

The brokerage expects earnings risks to be on the upside, catalysed by the scaling of artificial intelligence (AI), which is lifting productivity and margins across sectors. 

With enhanced liquidity from market micro-structure improvements and a lower interest rate environment, the STI is primed to re-rate towards the new target, Maybank said.

Positive on Reits, banks, and SMIDs

Maybank is most positive on banks and financials, real estate investment trusts (Reits), the Internet, the telecommunications sector and SMIDs.

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• Banks and financials: While rapidly falling domestic interest rates hurt net interest margins in 2025, margins are stabilising. In 2026, loan demand is expected to accelerate (+5.3 per cent), driven by the domestic construction boom, SMEs and reviving mortgages
• Reits: The sector is a major beneficiary of the steep decline in interest rates (around 200 bps drop in base rates), which lowers funding costs and supports accretive deals.
• Internet: In 2026, gross merchandise value (GMV) growth will likely take precedence over margin expansion as companies reinvest to capture market share. E-commerce and artificial intelligence (AI) manufacturing are main growth drivers.
• Telcos: 2026 is set to be a year of consolidation, which is expected to rationalise the competitive landscape and restore pricing discipline.
• Small and mid caps: The sector is in the early stages of a bull run. The deployment of the Equity Market Development Programme (EQDP) funds will largely happen in 2026, driving liquidity and valuations.

The brokerage’s top stock picks for the year are a mix of yield and growth plays: OCBC, Sea, SGX, Food Empire, CSE Global, CapitaLand Integrated Commercial Trust (CICT), Coliwoo, Lendlease Global Commercial Reit (LReit), StarHub and Suntec Reit.

Distributions set to rise for Reits

The brokerage is bullish on the S-Reit sector, maintaining a positive outlook as it expects distributions to inflect after a challenging period.

In a separate sector report released on Jan 12, Maybank forecast that distributions per unit (DPU) for Reits under its coverage would grow by an average of 3.1 per cent year on year in 2026, reversing a 0.9 per cent decline expected in 2025.

The bank noted: “Reits benefited from a steep decline in Singapore dollar base rates and, consequentially, in funding costs.” It added that the sector continues to benefit from ongoing portfolio reconstitution exercises and capital recycling.

Commercial and healthcare sectors are likely to lead DPU growth, Maybank said. The industrial sector is likely to experience a continued slowdown in rents, but AI-related demand would likely provide a cushion. 

It noted that cyclical drivers are aligning well for the office market due to limited near-term supply and strong hiring demand in the finance and insurance sectors.

Its top picks in the Reit space are CICT, CapitaLand Ascendas Reit, CapitaLand Ascott Trust, LReit, Mapletree Logistics Trust, OUE Reit and Suntec Reit.

Maybank’s preference for banks

Despite concerns over falling interest rates, Maybank remains constructive on the banking sector. While rapidly falling domestic rates hurt net interest margins (NIMs) in 2025, the brokerage observed that margins are now stabilising.

For 2026, Maybank expects loan demand to accelerate, forecasting sector loan growth of 5.3 per cent. This will likely be driven by a domestic construction boom, recovering mortgage demand, and the small and medium-sized enterprise (SME) segment.

Furthermore, the banks are seeing operational efficiencies kick in from years of technology investments.

“Significant tech investments over the past decade in traditional AI... have enabled accelerated adoption of new-gen AI across the sector,” the report read. “This is now showing up in operational efficiencies, especially in keeping cost escalations in check.”

Within the sector, Maybank prefers OCBC and DBS.

It noted that OCBC’s “One Group” synergies are delivering results, providing downside protection to returns on equity (ROE) amid volatility.

In the case of DBS, the brokerage favours the bank’s resilience, with hedging and credit expansion minimising the impact of falling rates on net interest income.