To The Moon

$DBS(D05.SI)$ $UOB(U11.SI)$

Singapore’s equity markets have entered uncharted territory. DBS Group Holdings (SGX: D05), the largest bank in Southeast Asia, has surged to a record high of S$52.87, propelling the Straits Times Index (STI) to its own all-time peak of 4,355.84 points. This rally has rekindled investor enthusiasm for Singapore equities, with JPMorgan projecting the STI could climb toward 5,000 points by year-end.

The optimism rests on a combination of declining global interest rates, renewed foreign capital inflows, and Singapore’s S$5 billion market development programme aimed at strengthening the nation’s capital markets. Adding symbolic weight to this milestone, DBS has reclaimed its title as the most valuable listed company in Southeast Asia, overtaking tech giant Sea Ltd. (NYSE: SE).

But with markets at record highs, investors face critical questions: Is there still upside left in DBS? Can the STI sustain its rally? Should investors prefer traditional banking over technology exposure in Singapore? And which stocks may be next to rewrite their record books?

DBS: The Regional Banking Giant Reasserts Dominance

For much of the past decade, DBS has positioned itself as a fortress institution — strong capital buffers, disciplined risk management, and consistent shareholder returns. Yet, its resurgence in 2025 also reflects broader shifts in capital markets.

The Key Drivers Behind DBS’s Record Run

1. Dividend Leadership

   DBS currently offers one of the highest dividend yields among major global banks, supported by its payout ratio of 50%–60%.

   With a forecasted annual dividend exceeding S$2.00 per share, DBS is firmly entrenched as a favorite among both retail and institutional income investors.

2. Earnings Resilience

   Net interest margins (NIMs) have begun to compress as rates ease, but DBS has offset this with strong growth in fee-based income.

   Its wealth management division and digital banking platforms have scaled effectively, contributing to a more diversified earnings base.

3. Balance Sheet Strength

   With a Common Equity Tier 1 (CET1) ratio above 14%, DBS maintains one of the most robust capital buffers in Asia.

   This ensures capacity to absorb shocks, expand lending selectively, and sustain dividend distributions.

4. Regional Growth Proxy

   DBS is increasingly viewed as a proxy for Southeast Asia’s long-term growth story. With footprints in India, Indonesia, and Greater China, the bank benefits from rising financial penetration and middle-class expansion.

By surpassing Sea Ltd. in market capitalization, DBS has symbolically reaffirmed that traditional banking remains foundational even in an era dominated by technology disruptors.

JPMorgan’s 5,000-Point Call: How Realistic Is It?

JPMorgan’s projection that the STI could hit 5,000 by year-end represents a bold, bullish stance. The target implies nearly 15% upside from current levels — ambitious, but not impossible.

The Macro Catalysts

1. Declining Interest Rates

   With the U.S. Federal Reserve pivoting toward rate cuts, Asian central banks — including the Monetary Authority of Singapore (MAS) — are expected to ease liquidity conditions.

   Lower yields globally may redirect capital toward high-dividend markets like Singapore, where banks and REITs offer attractive returns.

2. Singapore’s Market Development Programme

   The government’s S$5 billion initiative is designed to strengthen the equity ecosystem.

   Objectives include boosting liquidity, attracting institutional investors, supporting new listings, and enhancing Singapore’s role as a regional financial hub.

3. Sector Leadership

   Banking stocks — DBS, OCBC, and UOB — collectively make up over 40% of STI weighting, meaning their strength is pivotal to index performance.

   Other sectors, including industrials, REITs, and commodities, are also beginning to participate in the rally, broadening the base.

Risks to Consider

• Global Growth Slowdown: A sharp contraction in U.S. or Chinese growth could weigh on Singapore’s open economy.

• Geopolitical Tensions: Regional conflicts or trade disruptions may reduce investor confidence.

• Rate-Cut Pace: If interest rates decline too sharply, bank margins could contract faster than fee income grows.

On balance, JPMorgan’s target is plausible if global risk appetite remains strong, but the path upward is unlikely to be linear.

DBS vs. Sea: The Great Southeast Asia Market Rivalry

For much of the past three years, Sea Ltd. (NYSE: SE) symbolized Southeast Asia’s potential as a digital-first growth story. Its Shopee e-commerce platform and SeaMoney fintech arm made it a darling of global investors.

But Sea’s momentum has faltered, and DBS has overtaken it once again in market capitalization.

The Case for DBS

• Predictability: DBS’s earnings are resilient, underpinned by regulated banking income.

• Dividends: Sea does not yet pay meaningful dividends, while DBS provides consistent cash returns.

• Valuation: DBS trades at a forward P/E of around 11x, compared with Sea’s volatile and often growth-dependent multiples.

The Case for Sea

• Optionality: If Sea can stabilize its e-commerce margins and reignite digital finance growth, its upside could be substantial.

• Innovation: Sea remains a key digital ecosystem player in Southeast Asia, with younger demographics favoring its platforms.

Ultimately, the DBS vs. Sea debate reflects the classic stability versus growth dilemma. Conservative investors may prefer DBS, while growth-seekers may still hold faith in Sea’s turnaround.

Who Could Follow DBS to Fresh Highs?

DBS may be the headline driver of STI, but several other names are positioned to test new records:

1. Oversea-Chinese Banking Corporation (OCBC)

   Currently trading at multi-year highs, OCBC benefits from strong capital adequacy and an expanding wealth management franchise.

   Its exposure to Greater China offers additional upside should the region stabilize economically.

2. United Overseas Bank (UOB)

   With strong ASEAN connectivity and conservative lending practices, UOB has lagged DBS in share performance but could play catch-up.

   Dividend growth is likely to remain robust.

3. Singapore Exchange (SGX)

   A direct beneficiary of higher trading volumes and new listings spurred by Singapore’s capital markets programme.

   Could see a re-rating as foreign participation increases.

4. Singapore REITs

   After years of underperformance due to rising rates, quality REITs with strong balance sheets (CapitaLand Integrated Commercial Trust, Mapletree Logistics Trust) could rally as borrowing costs decline.

If multiple sectors participate in the rally, STI’s breadth will improve — a critical factor in sustaining momentum toward 5,000.

Investor Verdict: Should You Buy DBS at Record Highs?

With DBS trading at all-time highs, the natural question is whether it still offers value.

The Bull Case

• Dividend yield remains attractive at ~4%–5%, higher than global bank peers.

• Strong balance sheet ensures resilience in downturns.

• Regional exposure provides long-term growth optionality.

The Bear Case

• Rapid rate cuts could compress margins faster than non-interest income grows.

• Valuation at near-peak levels may limit upside in the short term.

• Geopolitical risks in Asia could affect cross-border business expansion.

Entry Price Zone: For long-term investors, accumulating DBS below S$50–51 offers a reasonable margin of safety. Opportunistic buyers may wait for pullbacks, but given its track record, DBS remains a core portfolio holding.

Key Takeaways

1. DBS is Southeast Asia’s crown jewel again — surpassing Sea to reclaim its title as the region’s most valuable listed company.

2. JPMorgan’s 5,000-point STI target is ambitious but achievable, provided rate cuts, capital inflows, and broad market participation align.

3. DBS vs. Sea is a classic stability vs. growth choice — with DBS the safer dividend play and Sea the speculative rebound candidate.

4. Other banks, SGX, and REITs may soon join DBS in rewriting record highs, expanding the rally’s breadth.

5. Investors should not dismiss DBS even at record levels — dividends, capital strength, and regional growth exposure make it a long-term anchor holding.

Conclusion

Singapore’s equity markets are experiencing a defining moment. DBS has proven once again that strong fundamentals, disciplined strategy, and stable dividends can outperform even the most disruptive tech challengers. The STI’s breakout reflects both local strength and global capital shifts, with JPMorgan’s 5,000-point target highlighting just how bullish sentiment has become.

For investors, the key is not simply whether DBS and STI can push higher, but how to position in a market that is simultaneously at record highs and facing shifting global winds. The answer lies in balance: anchor portfolios with DBS and other resilient banks, while selectively exploring growth and REIT opportunities.

In the long-term arc of Singapore’s markets, this may only be the beginning of a new era of capital market leadership in Asia.