Weiheng Chen, global investment strategist at JP Morgan Private Bank, explores how the Singapore equity market can be a useful source of attractive, diversified and steady income for portfolios. He also highlights the benefits of Asian emerging market equities in general.

The Singapore equity market presents a compelling combination of stable dividend income, attractive value and secular growth opportunities, according to Weiheng Chen (pictured), global investment strategist at JP Morgan Private Bank.

“Surprisingly to many investors, the Singapore equity market has demonstrated outperformance even against the S&P 500 in dollar terms in recent years, and with lower volatility,” Chen said in a note yesterday.

“Dividend income has historically been a meaningful and consistent driver of total returns in Asian equity markets, accounting for ~50 per cent of long-term performance, within which Singapore equities stand out,” he continued. “The market has traditionally been anchored by its financial, real estate and telecommunications sectors, which together make up roughly ~75 per cent of the benchmark Straits Times Index. These defensive, steady local champions, characterised by predictable cash flows and strong capital discipline, form the bedrock of the index and underpin its appeal to income-oriented investors seeking steadier return profiles.”

“Against an accommodative macro backdrop, real estate and real estate investment trusts (REIT) are seeing relief through lower interest rates and improved distribution per unit (DPU) growth, while banks are benefitting from strong flows into wealth management revenue,” he said.

The upbeat approach to the Asian city-state's economy shows how the jurisdiction has continued to flourish in various ways. One barometer has been the rise in value of the Singapore dollar, to the point where Julius Baer last year called it the world's most overvalued currency.

Incentives
Public policy continues to fuel momentum, JP Morgan's Chen said.

“Earlier this year, the Monetary Authority of Singapore (MAS) announced that it plans to expand the Equity Market Development Plan (EQDP) from S$5 billion to S$6.5 billion, which forms part of a broader set of initiatives aimed at strengthening the competitiveness of the local equity market,” Chen said.

The review group highlighted two structural matters: 1) A well-functioning equity market being key to support the growth of local enterprises, and 2) the Singapore equity market has seen fewer high quality listings and a decline in trading volumes in recent years, as capital shifted to larger global exchanges.

“EQDP specifically aims to address these challenges by encouraging greater retail and institutional participation, deepening trading liquidity across the market, and broadening investor engagement beyond large-cap stocks. Under the programme, the MAS plans to invest into strategies run by Singapore-based asset managers with a tilt towards small and mid-cap companies, albeit without a specified minimum percentage requirement,” Chen continued. “With the second cohort recently announced, the total allocation now amounts to S$3.95 billion across nine managers. A renewed focus on value and non-large-cap segments, alongside incremental capital channelled through the EQDP, could help Singapore equities continue along a gradual re-rating path and narrow the valuation discount relative to developed market (DM) peers.”

“A stronger emphasis on shareholder discipline is likely to translate into higher dividend payouts and improved capital efficiency, improving the return on equity (ROE) for Singapore equities over time, where dividend yields of ~4.7 per cent currently rank among the highest in developed markets,” Chen continued.

“Investments into Singapore equities also come with the benefit of global FX diversification through the Singapore dollar,” Chen said. “This is one of only a small handful of currencies that have appreciated against the dollar over the past 50 years. While it may be speculative to contemplate the long-term value of the currency (some analysts have pointed to potential parity with the dollar), the Monetary Authority of Singapore’s (MAS) strong commitment to price stability and gradual appreciation of the Singapore dollar, underpinned by ample official foreign reserves, have kept the currency on a stable strengthening trend.”

“While we see limited upside for the Singapore dollar in the near-term, the currency continues to benefit from very low levels of volatility and remains attractive to regional investors as a relative safe haven,” he added.

Asian equities
Like a number of investment managers, Chen highlighted how the appeal of Asian emerging market equities is increasingly evident in 2026. “Within the MSCI Asia ex-Japan Index, Taiwan, South Korea, China and India dominate, collectively accounting for over 85 per cent of the index’s weighting,” he said. “The pivotal roles of Taiwan and South Korea in the global artificial intelligence (AI) supply chain have led to substantial upgrades in earnings forecasts for both markets since the end of last year.”

“India and China, after a fundamentally sluggish 2025, look ready to narrow their gaps with the broader region. In India, more accommodative monetary and fiscal policies are supportive for economic growth,” he said.

“Despite an uncertain trade outlook with the US, India’s domestic-focused economy can provide buffers against material external shocks. China, as the largest constituent of the index, remains central to Asia emerging markets,” he continued. “Although the economically- important real estate sector has yet to signal a definitive trough, the easing of price competition among the nation’s internet giants and accelerated AI adoption could support a recovery in earnings for 2026. In tandem, China’s extensive catalogue of companies with high dividend yields is an effective tool that income-seeking investors can add to their portfolios.”

Chen thinks that MSCI Asia ex-Japan is positioned to deliver earnings growth exceeding 30 per cent this year – twice the rate of developed markets. He highlighted how Asia emerging markets present attractive dividend yields alongside higher volatility – making the region a favourable playground for option strategies. “In particular, the Korean and offshore Chinese markets stand out with pronounced implied volatility and strong liquidity. These characteristics provide compelling opportunities for investors to capitalize on collecting option premiums, both to boost income and mitigate overall portfolio volatility,” he said.

This stance is shared by other firms. London-headquartered M&G Investments remains positive about the outlook for emerging markets which outperformed developed ones in 2025, driven by a weaker US dollar, stronger relative earnings revisions and improving return on equity (ROE). Samy Chaar, chief economist, CIO Switzerland at Swiss private bank Lombard Odier, also told this news service this month that he will remain invested in Asia, which makes up 70 per cent of emerging markets, despite the conflict.