Week of February 16–20, 2026
Outlook | Market Dynamics | Strategic Solutions | Impact Assessment
Executive Summary
The week of February 16–20, 2026 represents a pivotal juncture for Singapore’s financial markets, defined by the interplay between a landmark domestic milestone and a complex global macro backdrop. On February 12, just days before this week opened, the Straits Times Index (STI) breached the 5,000-point level for the first time in its history—a watershed moment for Southeast Asia’s premier equity market. Trading this week commences in the shadow of that record, with the STI consolidating near 4,939 as investors weigh a holiday-shortened U.S. trading week, global AI sector volatility, and a dense calendar of U.S. macro data releases.
Singapore’s domestic fundamentals remain robust: GDP growth for 2025 has been revised upward to 5.0%, real household incomes grew 6.8%, and the Monetary Authority of Singapore (MAS) has maintained a pro-growth monetary stance. However, external headwinds—U.S. tech sector selloffs, Lunar New Year-related liquidity gaps in Chinese markets, and uncertainty around the Federal Reserve’s rate trajectory—introduce meaningful near-term volatility risks. This case study examines the key market forces at play, the forward outlook for Singapore’s equity, REIT, and currency markets, strategic responses for investors, and the broader economic impact.
- Market Context & Background
1.1 The STI’s Historic Milestone
The Straits Times Index crossed 5,000 points intraday on February 12, 2026—a milestone that arrived well ahead of analyst expectations. The STI closed that day at 5,016.76, capping a 22.7% gain for 2025 and extending a multi-year structural re-rating of Singapore equities. By the start of this week (February 16–17), the index had retreated to approximately 4,939, reflecting profit-taking and global risk-off sentiment rather than any deterioration in domestic fundamentals.
Key Drivers: The three domestic banks—DBS, OCBC, and UOB—which collectively constitute approximately 50% of STI market weight, have been the primary engine of this rally, supported by strong net interest margins, dividend yields, and AI-linked fee income growth.
JP Morgan has set an optimistic year-end target of 6,500 for the STI, while DBS economists project STI earnings growth of 8.8% for 2026, driven by a recovery in bank earnings from flat 2025 performance. The MAS’s S$5 billion Equity Market Development Programme (EQDP), with its second tranche of S$2.85 billion expected for deployment in the first half of 2026, continues to provide structural buying support.
1.2 Singapore Macroeconomic Backdrop
Several key data points frame the macroeconomic environment entering this week. Singapore’s 2025 GDP growth was revised upward to 5.0% by the Ministry of Trade and Industry on February 10, from an advance estimate of 4.8%, significantly exceeding the official forecast of ‘around 4%’. Fourth-quarter 2025 GDP growth was upgraded to 6.9% year-on-year, driven by manufacturing, wholesale trade, finance, and insurance. For 2026, MTI raised its GDP growth forecast to a range of 2%–4%, up from 1%–3% previously, citing improved global outlook and sustained AI investment momentum.
Unemployment remains at 2.0%, and median monthly household market income rose 7.7% in nominal terms to S$12,446. Inflation is expected to run at 1%–2% for 2026, with upside risks from Certificate of Entitlement (COE) premiums, carbon taxes, and wage increases partially offset by low global commodity prices. The MAS held policy steady at its January meeting while raising its inflation forecasts modestly—a posture consistent with continued macroeconomic resilience.
1.3 Global Market Environment
Global markets enter this week under pressure from AI sector anxiety. The Nasdaq 100 experienced its worst two-week pullback since October 2025, as concerns about AI substitution effects and revenue durability weighed on mega-cap technology valuations. The equal-weighted S&P 500 (RSP) is outperforming its market-cap counterpart year-to-date—up over 6% versus a marginal gain for the cap-weighted index—signalling a broadening of the equity rally from narrow tech leadership toward value, energy, industrials, and consumer staples.
The U.S. Federal Reserve held rates steady at its January meeting. The 10-year U.S. Treasury yield has declined to fresh two-month lows near 4.03%, reflecting benign CPI data (2.4% year-on-year in January) and growing expectations that the Fed’s next move will be a rate cut, though timing has shifted to July 2026 following stronger-than-expected labour market data. Chinese markets are closed all week for the Lunar New Year, creating a notable liquidity vacuum across Asian markets with implications for Singapore’s trading volumes. - Weekly Events Calendar & Market Catalysts
The following table summarises the key scheduled events during the week, with their likely relevance to Singapore-listed assets:
Date Event Description SGX Relevance
Mon 16 Feb U.S. Presidents Day NYSE closed; reduced liquidity in USD assets Lower SGX volumes; USD/SGD range-bound
Tue 17 Feb Empire State Manufacturing; Palo Alto earnings First major U.S. data; tech earnings signal AI demand Singtel, ST Engineering, Venture Corp. sensitive
Wed 18 Feb U.S. Housing Starts; FOMC Minutes; Analog Devices, DoorDash FOMC minutes provide Fed rate-path clarity; housing data affects REITs S-REITs, bank NIMs, SGD rate sensitive
Thu 19 Feb U.S. Trade Deficit; Jobless Claims; Walmart & Deere earnings Trade data relevant for Singapore’s export-dependent economy Shipping, logistics, commodities exposure
Fri 20 Feb U.S. PCE Inflation (Dec); Q4 GDP; S&P PMI Flash PCE is Fed’s preferred inflation measure; GDP confirms U.S. growth SGD, STI direction, REIT valuations
- Market Outlook
3.1 Straits Times Index (Equities)
The STI is expected to consolidate in the 4,900–5,050 range during this week, having pulled back from the historic 5,021 intraday high reached on February 12. The near-term directional bias will be determined primarily by Friday’s U.S. PCE inflation print and Q4 GDP data. A benign PCE reading (below 2.5% year-on-year) would reinforce the Federal Reserve’s rate-cutting trajectory and provide a positive catalyst for Singapore equities. Conversely, a hot inflation print could trigger renewed risk-off sentiment.
Structurally, STI earnings growth of 8.8% projected for 2026 provides a fundamental underpinning. Sector rotation dynamics—favouring energy, financials, and industrials over pure-play tech—are broadly constructive for the STI’s composition. The banks remain the critical swing factor: DBS, OCBC, and UOB benefit from sustained high rates and AI-driven fee growth, but face net interest margin compression risk if the Fed accelerates its easing cycle.
Analyst Consensus: JP Morgan projects STI reaching 6,500 by year-end 2026. DBS projects an STI year-end target of 4,880, recently revised higher. Most analysts expect 3–8% total returns including dividends for calendar year 2026.
3.2 Singapore REITs (S-REITs)
S-REITs are at an inflection point. As the rate cycle turns, the structural headwinds that weighed on REIT valuations throughout 2023–2025 are beginning to abate. Many S-REITs currently trade at 5–15% discounts to their net asset values (NAVs), with distribution yields of 6–7% offering attractive income relative to the declining risk-free rate. FOMC minutes due Wednesday will be closely watched by REIT investors for any shift in the rate trajectory narrative.
Keppel REIT’s FY2025 results, released in the week prior, showed a 6.6% year-on-year decline in distribution per unit (DPU), though portfolio occupancy and quality improved. Keppel Infrastructure Trust, by contrast, delivered stable DPU growth and is well-positioned for digital infrastructure tailwinds. The divergence between data centre and industrial REITs (benefiting from AI infrastructure buildout) versus office and retail REITs (facing structural demand shifts) is expected to widen through 2026.
3.3 SGD & Currency Outlook
The Singapore Dollar is expected to remain stable-to-firm against the USD during this week, trading in a tight range as the MAS’s exchange rate-centred monetary policy framework provides inherent stability. USD/SGD is influenced by U.S. rate expectations, with the declining 10-year Treasury yield providing modest SGD tailwinds. Singapore’s current account surplus, low inflation, and strong fiscal position support SGD’s safe-haven appeal, particularly during episodes of global volatility.
A materially hawkish PCE reading on Friday could push USD/SGD higher as the USD strengthens on delayed Fed cut expectations. Conversely, confirmation of disinflation would support the SGD. Most economists expect USD/SGD to trade in the 1.32–1.35 range through the first half of 2026.
3.4 Key Risk Factors
The primary risk scenarios for the week include: (1) a U.S. PCE inflation print above consensus expectations triggering a global risk-off move; (2) further AI sector valuation compression spilling over into Singapore tech-adjacent stocks (Singtel, ST Engineering, Venture Corporation); (3) geopolitical developments in the South China Sea or escalation of Iran-related oil price volatility; and (4) unexpected weakness in Walmart or Deere earnings signalling a U.S. consumer or industrial slowdown. On the upside, a dovish FOMC minutes release could accelerate the S-REIT re-rating and drive the STI back toward 5,000. - Strategic Solutions & Investment Positioning
4.1 Equity Portfolio Strategy
Given the current confluence of a post-breakout consolidation in the STI, global tech pressure, and a data-heavy U.S. week, the recommended equity positioning for Singapore-focused portfolios is as follows:
Maintain overweight exposure to Singapore banks (DBS, OCBC, UOB): their 5–6% dividend yields, strong balance sheets, and AI-driven fee income provide both income and capital appreciation potential in a range-bound rate environment.
Consider tactical overweight in defensive sectors: consumer staples (Sheng Siong), utilities (Sembcorp), and healthcare (Raffles Medical) offer earnings stability and lower correlation to global tech volatility.
Reduce concentration in pure-play tech-adjacent names: Venture Corporation and Valuetronics face near-term headwinds from AI disruption concerns in U.S. client capex budgets.
Monitor small and mid-cap (SMC) opportunities: the MAS EQDP’s second-tranche deployment targets SMCs, where the ‘buy-in-anticipation’ effect has historically generated alpha ahead of formal deployment announcements.
4.2 S-REIT Positioning
A barbell strategy within S-REITs is advised for the current environment. Investors should position in high-quality data centre and industrial REITs (Mapletree Industrial Trust, Keppel DC REIT) on one side of the barbell, capturing AI infrastructure demand, and in retail and logistics REITs with strong sponsor backing and healthy balance sheets (CapitaLand Integrated Commercial Trust, Frasers Logistics Trust) on the other, capturing the income-yield compression trade as rates decline.
Avoid REITs with elevated gearing ratios (above 40%) and those with significant offshore exposure to markets facing structural headwinds (China commercial real estate, European office). Keppel REIT’s upgrade to BUY following its FY2025 results, despite the DPU miss, reflects the market’s forward-looking assessment of NAV recovery and occupancy improvement.
4.3 Currency & Fixed Income
For investors with multi-currency exposure, the current environment favours maintaining SGD-denominated assets over USD-denominated equivalents given the SGD’s defensive characteristics and declining USD fixed-deposit rates. Singapore Government Securities (SGS) offer attractive risk-adjusted yields at approximately 3.0–3.5% on the 2-year tenor. USD fixed deposits at Singapore banks (approximately 3.90% p.a. for 12-month terms) remain competitive but carry FX conversion risk if the SGD appreciates through the year.
Portfolio Construct: A diversified blended portfolio targeting: 40% Singapore equities (banks + industrials), 30% S-REITs (data centre + retail), 20% SGD fixed income, 10% global equities provides an estimated blended yield of approximately 5.0% with moderate volatility exposure.
4.4 Risk Management Protocols
Given the elevated probability of short-term volatility driven by Friday’s PCE and GDP releases, tactical investors should consider the following risk management actions:
Set stop-loss levels at 4,800 for STI-tracking positions, representing a 2.8% decline from current levels and a key technical support zone.
Hedge U.S. data risk through SGX Nifty 50 or MSCI Asia ex-Japan futures positions that provide inverse correlation to risk-off moves.
Monitor the VIX (expected to trend higher through February based on seasonal patterns) as a leading indicator of global risk appetite.
Utilise the SGX’s derivatives market for tactical REIT index hedging ahead of the FOMC minutes release on Wednesday. - Impact Assessment
5.1 Impact on Singapore’s Equity Market
The week’s events carry significant implications for Singapore’s equity market across multiple timeframes. In the near term, the holiday-shortened U.S. week will compress global liquidity and likely reduce SGX trading volumes by 15–20%, consistent with historical patterns during Chinese New Year and U.S. holiday overlaps. This reduced liquidity could amplify price moves in either direction following key data releases.
In the medium term, the configuration of U.S. inflation and growth data will establish the narrative framework for the first quarter of 2026. A ‘Goldilocks’ outcome (PCE in line with or below consensus, Q4 GDP confirming solid growth) would be highly constructive for Singapore equities and could provide the catalyst for a renewed STI push toward the 5,100–5,200 zone. This scenario would also benefit the EQDP deployment impact, as improving sentiment amplifies fund inflows.
The structural de-rating of U.S. mega-cap tech stocks and the corresponding rotation toward value, industrials, and Asia ex-tech is a secular tailwind for Singapore’s financial market composition. As a market with minimal direct tech index exposure but significant manufacturing, logistics, and financial sector depth, the STI is well-positioned relative to its regional peers during periods of tech sector leadership reversal.
5.2 Impact on Singapore’s Banking Sector
The Singapore banking sector—the dominant driver of STI performance—faces a nuanced week. The FOMC minutes on Wednesday will be scrutinised for any signals that the Fed is considering a more aggressive easing timeline. Each 25 basis point reduction in U.S. rates translates to approximately a 1.5–2.0% impact on Singapore bank NIMs over a 12-month horizon, as Singapore’s SORA rate is closely correlated with the Fed funds rate.
However, DBS economists project SORA stabilising at 1.25% by end-2026, and bank earnings are expected to transition from NIM compression to fee income and volume growth as the primary earnings driver. The 13F filings due this week from major institutional investors will reveal Q4 2025 portfolio positioning and could catalyse institutional rebalancing trades if significant changes in Singapore bank holdings are disclosed.
5.3 Impact on Real Estate & REITs
The S-REIT sector stands to benefit disproportionately from a dovish inflection in the U.S. rate narrative this week. A 10-year U.S. Treasury yield sustained below 4.0% would narrow the spread compression that has weighed on REIT valuations and could trigger a meaningful re-rating. The sector currently offers distribution yields of approximately 6–7%, a spread of approximately 200–300 basis points above Singapore 10-year government bonds, approaching historically attractive levels.
The data centre REIT sub-sector—represented by Mapletree Industrial Trust and Keppel DC REIT—benefits from AI infrastructure demand that is largely independent of the interest rate cycle. The Micron Technology announcement of planned $200 billion in data centre spending, reported during this week, is a positive read-across for Singapore’s data centre REITs and industrial property market, given Singapore’s position as a key Asia-Pacific colocation hub.
5.4 Broader Economic Impact
Singapore’s economy remains exposed to U.S. trade policy and global manufacturing cycles. The U.S. trade deficit data due Thursday and the Q4 GDP release on Friday will provide updated signals on the trajectory of global trade flows. Singapore’s non-oil domestic exports grew 4.8% in 2025, significantly exceeding official forecasts, and the manufacturing sector—particularly electronics and semiconductors—has been a key GDP driver.
The Walmart and Deere earnings reports, while not directly linked to Singapore, serve as proxies for U.S. consumer health and agricultural/industrial capital expenditure—both of which feed into Singapore’s export demand and Jurong Island petrochemical complex activity. Deere’s prior warning of lower-than-expected annual net income adds to caution around industrial sector capex globally.
Budget 2026, announced on February 12 by Prime Minister Lawrence Wong, introduced AI adoption incentives, business transformation grants, and enhanced CPF investment options. These measures are expected to stimulate domestic corporate investment and consumer confidence through 2026, providing an additional layer of economic resilience to counterbalance any external softening. - Conclusion
The week of February 16–20, 2026 encapsulates the dual nature of Singapore’s market position: a structurally strong, well-governed financial centre at an inflection point of historic equity market performance, navigating a complex and data-heavy global macro environment. The STI’s breach of 5,000 points is not merely a psychological milestone but reflects genuine economic re-rating driven by GDP revision, budget policy, and institutional market development.
The primary market determinant for the week will be Friday’s U.S. PCE and GDP data, which will either validate the current narrative of disinflation-with-growth and accelerate Singapore’s equity re-rating, or introduce renewed volatility if inflation re-accelerates. In either scenario, Singapore’s structural advantages—a AAA-equivalent sovereign balance sheet, AI investment tailwinds, strong banking fundamentals, and the MAS’s prudent exchange-rate anchoring—provide a resilient foundation.
For institutional and retail investors alike, the strategic imperative is to distinguish between cyclical volatility—amplified this week by reduced liquidity and geopolitical uncertainty—and the secular bull case for Singapore equities, which remains intact. Portfolio construction should emphasise dividend income, defensive quality, and selective positioning in AI-infrastructure beneficiaries within the SGX universe.
Case Study prepared February 18, 2026. For informational and educational purposes only. This document does not constitute investment advice. Past performance is not indicative of future results. Data sourced from SGX, MAS, MTI, TheFinance.sg, CNBC, Schwab Market Update, IG Market Navigator, Morningstar, and other publicly available financial sources.