Singapore Banks Propel STI to All-Time Highs

Shares of Singapore’s major lenders, OCBC and UOB, surged to unprecedented record highs on Friday, January 23, 2026, propelling the benchmark Straits Times Index (STI) to an all-time peak. This significant market rally was largely driven by a wave of analyst upgrades and a renewed bullish sentiment towards Singapore’s banking sector, underpinned by the city-state’s robust economic performance and its growing reputation as a global financial safe haven.

On a momentous trading day, OCBC shares jumped as much as 3.3 percent to S$21.27, while UOB shares experienced an even more dramatic surge, climbing 4.2 percent to S$39.19 by late morning. The heavy weighting of these financial giants in the index translated directly into a substantial boost for the STI, which climbed 1.2 percent to reach an all-time high of 4,888.96 points. This performance underscores a sharp reversal in market sentiment that had, at the start of the year, seen a majority of analysts maintaining a ‘hold’ stance on UOB, particularly after the bank had taken larger pre-emptive general allowances in its Q3 2025 results.

Analyst Confidence Drives Market Momentum

The catalyst for this impressive market movement stemmed directly from positive revisions by prominent financial analysts. Macquarie analyst Jayden Vantarakis notably upgraded his call on UOB to ‘outperform’, simultaneously lifting its target price to S$41. Vantarakis also raised OCBC’s target price to S$21.50. His optimistic outlook is rooted in the strategic advantage Singaporean banks hold, particularly their positioning to benefit from substantial wealth asset management inflows. This trend is a direct consequence of Singapore’s perceived status as a ‘safe-haven’ amidst global economic uncertainties, attracting significant capital from high-net-worth individuals and institutions seeking stability and growth.

Adding to the chorus of positive sentiment, Morgan Stanley also adjusted its target price for UOB, increasing it from S$40.10 to S$40.40. These upgrades collectively signal a strong vote of confidence from the analytical community, highlighting the banks’ fundamental strength and their capacity to capitalize on current market dynamics. The momentum for UOB had already begun building the preceding day, with shares climbing 2.3 percent, tracking broader Wall Street gains and a rating upgrade from Macquarie.

Institutional Inflows and Strong Fundamentals

Market observers have been quick to note the increased activity surrounding Singapore’s banking sector. Geoff Howie, a market strategist at the Singapore Exchange, pointed out a significant pick-up in trading turnover for all three major local banks—OCBC, UOB, and DBS—in January compared to the previous six months. Howie’s analysis further revealed that these lenders are attracting considerable institutional capital, with OCBC leading the local market in net inflows. This inflow of institutional funds is a critical indicator of investor confidence, suggesting that large-scale investors are increasingly allocating capital to Singaporean banks, anticipating sustained growth and stability.

Beyond short-term market movements and analyst recommendations, the underlying fundamentals of Singapore’s banking sector remain robust. Howie emphasized that the three local banks have consistently demonstrated strong performance, collectively reporting over S$8 billion in quarterly net interest income for three consecutive years. Furthermore, the third quarter of 2025 saw a historic peak in non-interest income, reaching S$5 billion. These figures underscore the banks’ diversified revenue streams and their ability to generate substantial earnings from both traditional lending activities and other financial services, reinforcing their financial resilience and growth prospects.

Broader Economic Tailwinds and Market Outlook

The stellar performance of OCBC and UOB, and by extension the STI, is not an isolated event but rather a reflection of a broader bullish sentiment permeating the Singaporean economy and its financial markets. Earlier in the year, analysts had already projected that the STI could breach the 5,000-point mark by the end of 2026. This optimistic forecast is supported by several key factors, including favorable policy tailwinds, a projected recovery in corporate earnings across various sectors, and a revitalized initial public offering (IPO) market that is expected to inject fresh capital and dynamism into the exchange.

Singapore’s macroeconomic environment has also been a significant supportive factor. The city-state’s gross domestic product (GDP) expanded by a higher-than-expected 4.8 percent in 2025, following a particularly robust fourth quarter. This strong economic growth provides a fertile ground for the banking sector, as it typically translates into increased demand for credit, higher consumer spending, and greater business activity, all of which contribute positively to bank profitability. The sustained economic expansion reinforces Singapore’s position as a stable and attractive investment destination, further enhancing the appeal of its financial institutions.

The current market rally, driven by the strong performance of Singapore’s leading banks, signals a period of heightened investor confidence in the city-state’s economic resilience and its financial sector’s enduring strength. The convergence of strategic analyst upgrades, significant institutional capital inflows, and a supportive macroeconomic backdrop paints a compelling picture for continued growth, solidifying Singapore’s reputation as a pivotal financial hub in a dynamic global order.