Dear readers, the Singapore’s Straits Times Index (STI) is now at an all-time high of 4,189.50.
Just this month (1 July 2025), the STI reach the Overbought region (defined as RSI >70) and since then, there has been no stopping down.
STI Technicals: Full Steam Ahead—But for How Long?
The STI’s powerful rally in 2025 has been driven by a combination of factors:
- Robust banking sector earnings from DBS, OCBC, and UOB
- Improved sentiment following the successful listing of large IPOs like NTT DC REIT and China Medical Systems Holdings
- Optimism about regional economic recovery, particularly in Southeast Asia and China
- Inflows from global investors seeking relative safety in Singapore’s stable financial environment
The question remains: how sustainable is this rally when more than half of the STI stocks are flashing Overbought signals?
The 16 STI Stocks Currently Overbought (as of July 2025)
According to the latest technical screeners, 16 out of the 30 STI component stocks have RSI values above 70, officially placing them in Overbought territory:
- CapitaLand Investment
- City Developments Limited (CDL)
- DBS Group Holdings
- Dairy Farm International
- Jardine Cycle & Carriage (Jardine C&C)
- Jardine Matheson Holdings (JMH)
- Keppel Corporation
- Oversea-Chinese Banking Corporation (OCBC)
- SATS Ltd
- Seatrium Ltd
- Sembcorp Industries
- Singapore Exchange (SGX)
- Singapore Airlines (SIA)
- Singapore Telecommunications (Singtel)
- United Overseas Bank (UOB)
- Venture Corporation
Let’s break this down sector by sector to better understand what’s driving these stocks higher—and whether these levels can be justified.
Sector Breakdown: What’s Driving the Overbought Surge?
1. Financials: Strong Earnings, Strong Momentum
- DBS, OCBC, UOB – Singapore’s banking trio continues to post solid earnings, boosted by higher net interest margins and resilient loan growth. The banking sector has benefitted from sticky inflation and continued demand for credit, even as interest rate cuts are delayed. Still, their RSI above 70 suggests profit-taking may be near.
- SGX – The bourse operator saw a strong bounce from increased derivatives and IPO activity. The success of recent listings like NTT DC REIT and China Medical Systems has lifted market sentiment.
2. Real Estate: Capital Gains and Speculation
- CapitaLand Investment and City Developments have ridden on the wave of capital rotation into hard assets and real estate. CDL in particular jumped after board reshuffling news, including the exit of veteran board member Phillip Yeo. Both counters are trading near or above their one-year highs.
3. Industrials: Seatrium, Keppel, and Sembcorp
- Seatrium Ltd has had an incredible run in 2025, with investors betting on a turnaround in the offshore and marine sector. With oil prices rebounding and green energy infrastructure investments increasing, Seatrium and Keppel Corp have drawn speculative inflows.
- Sembcorp Industries has been a major beneficiary of Singapore’s clean energy push, with continued international contracts in India and Southeast Asia. Its RSI now signals stretched conditions.
4. Conglomerates and Multinationals: Jardine Group in the Spotlight
- Jardine C&C and JMH have risen in tandem with the improved performance of their underlying businesses across Asia. Recovery in Indonesia, Hong Kong, and China has lifted earnings expectations. However, both are sensitive to macro shocks and may face volatility if China’s economic momentum falters again.
5. Consumer & Aviation: Recovery Play or Overhype?
- SIA – Singapore Airlines is flying high, literally and figuratively. With travel demand returning, yields have remained elevated. But geopolitical risks and rising fuel prices could test its strength soon.
- Dairy Farm International – With operations across Asia, the stock is seeing a re-rating as consumer confidence returns in key markets like China and Hong Kong.
6. Technology and Logistics
- Venture Corp – This electronics manufacturer has seen its stock outperform, thanks to improving order visibility and the AI hardware cycle. Still, cyclicality remains a concern.
- SATS – A laggard-turned-leader in the aviation food and logistics space, SATS now trades at a premium due to rising margins and capacity utilization. But RSI >70 is a cautionary signal.
7. Telecommunications
- Singtel – Often seen as a defensive play, Singtel’s recent performance has surprised investors. Its efforts to streamline operations, monetise data centres, and grow regional investments have sparked a re-rating.
What Can History Teach Us?
This is not the first time that STI has seen such broad-based Overbought conditions. A similar pattern occurred:
- In early 2007, just before the Global Financial Crisis, where 18 STI stocks became Overbought
- In late 2020, following vaccine announcements, 17 STI stocks were in Overbought zones, though the market corrected modestly afterward
The lesson? Overbought levels don’t necessarily signal the end of a bull run—but they do mark increased risk of volatility, sector rotation, or short-term corrections.
What Investors Should Watch Next
1. Upcoming Earnings Season
Investors should keep an eye on Q2 2025 results starting late July. If earnings disappoint or forward guidance is trimmed, it could trigger a round of profit-taking, especially for Overbought stocks.
2. Central Bank Signals
While markets have priced in delayed interest rate cuts by the Fed and MAS, any surprise hawkishness or macroeconomic data shocks could spook sentiment.
3. China and Regional Stability
Many STI companies are Asia-facing. If the Chinese recovery stalls, or if political tensions flare in the Taiwan Strait or South China Sea, it may affect earnings and investor confidence.
4. Retail vs Institutional Flow
Singapore investors need to observe if the recent rally has been largely retail-driven. Heavy institutional rotation out of growth sectors and into value (or vice versa) could shift the narrative quickly.
Final Thoughts: Greed, Caution, or Both?
As Warren Buffett famously said, “Be fearful when others are greedy.” With the STI rallying to record highs and a majority of its component stocks flashing Overbought signals, it is perhaps time to take a step back, review portfolios, and avoid getting caught in euphoria.
That said, this does not mean panic selling. Instead:
- Trim positions in stocks that have rallied too far too fast
- Rebalance into undervalued sectors or stocks not yet Overbought
- Accumulate cash or short-term safe assets like Singapore T-bills or fixed deposits
- Consider downside hedging if your portfolio is heavily STI-weighted
Closing Thoughts
That wraps up this week’s technical scanner of the Straits Times Index (STI) Overbought and Oversold conditions. With 16 stocks currently Overbought, we urge investors to be vigilant, analytical, and disciplined in their next moves.
While the market’s strength reflects solid underlying fundamentals in some sectors, the widespread Overbought conditions suggest that a cooling-off period could be near.
We’ll continue to track STI developments in the coming weeks. Until then—stay diversified, stay cautious, and don’t chase the herd.
Let’s meet again next week with a fresh review of STI momentum indicators and hidden opportunities in Singapore’s stock market.