Dear readers, amidst the ongoing turbulence of the geopolitical landscape, particularly with the escalating conflict between Israel and Iran, global financial markets are exhibiting signs of caution and prudence.
The tension in the Middle East has historically had ripple effects across international markets, impacting investor sentiment, commodity prices, and regional economic outlooks.
In this context, the Singapore stock market, often viewed as a barometer for regional economic health, has also adopted a cautious stance. The Straits Times Index (STI), Singapore’s premier benchmark, has experienced slight fluctuations as investors navigate the geopolitical uncertainties and their potential implications.
Singapore’s STI Performance and Market Sentiment
On June 20, 2025, the STI closed at 3,883.43, representing a modest decline from 3,911.42 on June 13, 2025.
This drop of approximately 0.70% over the week underscores a cautious but not overly alarmed market sentiment.
Investors are carefully assessing the potential impacts of regional tensions, commodity price volatility, and global macroeconomic indicators. Such modest movements are typical in periods of geopolitical uncertainty, where market participants often adopt a “wait and see” approach, reducing exposure to riskier assets and favoring more stable investments.
Technical Indicators and Market Dynamics
A closer look at technical indicators reveals insightful nuances.
Among the STI constituent stocks, two stand out as being overbought, indicated by Relative Strength Index (RSI) values above 70.
Conversely, two stocks are identified as oversold, with RSI below 30. These metrics help investors gauge market momentum and potential reversal points.
Overbought STI stocks:
Capitaland Integrated Commercial Trust (CICT)
Capitaland Integrated Commercial Trust has delivered a robust year-to-date performance, rising by approximately 11.28%. This indicates resilient investor confidence and strong underlying asset performance despite regional uncertainties.
The trust’s recent financials reveal positive net inflows, with SGD 11.5 million recorded during the week of June 9, 2025. Such inflows highlight sustained institutional interest, which can provide a stabilizing influence amid volatile market conditions.
Furthermore, CICT announced an increase in its Euro Medium Term Note (EMTN) programme limit from US$3 billion to US$7 billion. This expansion signals confidence from the trust’s management in future growth opportunities and access to capital markets for refinancing or acquisitions.
Such strategic moves are crucial in maintaining the trust’s competitive edge and providing liquidity for potential expansion or portfolio optimization.
Keppel Limited
Keppel Limited, a prominent conglomerate with diversified holdings across offshore and marine, property, and infrastructure sectors, has experienced a weekly gain of 7.86%. This upward movement aligns with rising crude oil prices, which tend to benefit offshore and marine companies like Keppel, especially in times of geopolitical tensions impacting the Middle East and Iran.
The company’s strategic positioning in energy and infrastructure sectors makes it sensitive to global commodity fluctuations. Recent developments include the appointment of Piyush Gupta, the former CEO of DBS Bank, as Keppel’s Deputy CEO starting July 1, 2025.
His extensive banking and strategic expertise are expected to bolster Keppel’s growth initiatives, especially in navigating complex geopolitical environments and expanding its financial capabilities. Leadership changes often signal strategic shifts, and investors will watch closely how Keppel leverages this new appointment to capitalize on emerging opportunities.
Stocks Facing Challenges: The Oversold Segment
Thai Beverages: Navigating Regulatory Headwinds
Thai Beverages, a leading player in the Southeast Asian beverage industry, has seen its stock decline by a significant 20.54% year-to-date. The primary catalyst is the challenging regulatory environment in Vietnam, one of the company’s key markets.
The Vietnamese government’s recent approval of a steep increase in the special consumption tax on alcoholic beverages, including beer and spirits, poses a substantial headwind.
Specifically, the new tax regime aims to curb alcohol consumption and boost state revenues. The tax rate on beer and strong liquor will climb progressively from 65% to 70% annually, reaching 90% by 2031. Spirits with less than 20% alcohol content will face similar hikes, with the rate rising from 35% to 60% over the same period. This tax escalation is likely to suppress demand for these products in Vietnam, especially impacting Sabeco, Thai Beverages’ local subsidiary and one of the dominant players in the Vietnamese beer market.
The increase in excise duties aligns with public health initiatives but raises concerns about profitability and market share retention for Thai Beverages. Over the medium to long term, these regulatory measures could lead to reduced volumes, margin compression, and strategic reevaluations, especially in markets where price sensitivity is high.
Wilmar International: Facing Legal and Regulatory Challenges
Wilmar International, Asia’s leading agribusiness group, has experienced a weekly decline of 2.99% and a monthly drop of 5.81%. The most recent challenge involves legal actions taken by Indonesian authorities, who seized a substantial sum—11.8 trillion rupiah (approximately S$928 million)—from Wilmar’s parent company, Wilmar Group, in connection with a palm oil graft case.
The allegations involve corruption and graft related to palm oil licensing and export permits, issues that have plagued the sector in Indonesia, which is the world’s largest producer of palm oil. Such legal disputes can significantly impact investor confidence, disrupt operations, and lead to financial penalties. The seizure of assets underscores the seriousness of the allegations and the risks associated with corporate governance and compliance in the region.
Wilmar’s exposure to Indonesia’s regulatory environment highlights the broader geopolitical and economic risks in Southeast Asia. Investors will need to monitor legal developments closely, as ongoing investigations and potential reforms could influence Wilmar’s operational strategies and financial health.
Broader Market and Geopolitical Context
The current geopolitical environment, marked by tensions between Israel and Iran, has a notable influence on commodity prices, energy markets, and regional stability.
Oil prices, in particular, often react sharply to Middle Eastern conflicts, affecting energy-related stocks and sectors globally.
Keppel’s recent gains can partly be attributed to this dynamic, as increased oil prices tend to benefit offshore and marine companies involved in energy infrastructure.
Furthermore, the conflict’s ripple effects extend to regional currencies, investor risk appetite, and capital flows. Emerging markets and resource-dependent economies are especially sensitive, which can lead to increased volatility in markets like Singapore’s.
In such times, investors tend to adopt a risk-averse approach, favoring stable assets such as real estate investment trusts (REITs) and large-cap stocks with strong fundamentals. This cautious stance is reflected in the modest movements of the STI and the selective focus on certain stocks poised for resilience or recovery.
Strategic Outlook and Investment Considerations
Looking ahead, investors should consider several factors:
- Geopolitical Developments: Any escalation or de-escalation in the Middle East conflict will likely influence commodity prices and market sentiment. Staying informed through credible news sources and geopolitical analyses is essential.
- Interest Rate Movements: Central banks around the world, including Singapore’s, are closely monitoring inflation and economic growth. Changes in interest rates can impact borrowing costs, dividend yields, and valuation multiples.
- Corporate Fundamentals: Despite geopolitical uncertainties, some companies continue to demonstrate strong fundamentals, strategic growth plans, and resilience. These stocks may offer opportunities for long-term investors.
- Regulatory Environment: Regulatory changes, such as those in Vietnam affecting Thai Beverages, can pose risks but also create entry points for strategic repositioning or diversification.
- Legal and Governance Risks: As seen with Wilmar, legal issues and governance concerns can significantly impact share prices. Due diligence and risk assessment are crucial before making investment decisions in regions with complex regulatory landscapes.
Note: The analysis presented here is for informational purposes only and does not constitute investment advice. Investors should conduct their own research or consult financial advisors before making investment decisions.