The Singapore equity market presents a compelling combination of stable dividend income, attractive value and secular growth opportunities. Surprisingly to many investors, the Singapore equity market have demonstrated outperformance even against the S&P 500 in both USD and SGD terms in recent years, and with lower volatility.
In recent years, the broad wave of corporate governance and capital market reforms across the region (e.g. South Korea’s Corporate Value-up Program, Japan’s market reforms) is also providing a supportive policy tailwind, with Singapore very much part of that shift.
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. The review group highlighted two structural issues: 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 program, 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. With the second cohort recently announced, the total allocation now amounts to S$3.95b across nine managers. A renewed focus on value and non-large-cap segments, alongside incremental capital channeled 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% currently rank among the highest in DM.
With the year-to-date outperformance, valuations are at a premium to historical averages but remain reasonable relative to global markets. While the FTSE Straits Times Index trades at ~15x FY27e with an expected an EPS growth rate of ~7% over the next two years, high dividend income, and improving shareholder returns could help justify that premium.
Investments into Singapore equities also come with the benefit of global FX diversification through the Singapore dollar (SGD). This is one of only a small handful of currencies that have appreciated against the USD 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 USD), the Monetary Authority of Singapore’s (MAS) strong commitment to price stability and gradual appreciation of the SGD, underpinned by ample official foreign reserves, have kept the currency on a stable strengthening trend. While we see limited upside for SGD 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’.
Beyond Singapore, the appeal of Asia EM equities is increasingly evident in 2026, and global investors are taking notice. Within the MSCI Asia ex-Japan Index, Taiwan, South Korea, China and India dominate, collectively accounting for over 85% of the index’s weighting. Historically, these markets (excluding China) have demonstrated consistent earnings delivery, with India, Taiwan, and South Korea posting average earnings growth of 19%, 20%, and 28% respectively over the past five years. This track record is expected to continue into 2026.
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.
Despite an uncertain trade outlook with the U.S., India’s domestic-focused economy can provide buffers against material external shocks. China, as the largest constituent of the index, remains central to Asia EM. 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 catalog of companies with high dividend yields is an effective tool that income-seeking investors can add to their portfolios.
Putting the pieces together, MSCI Asia ex-Japan is positioned to deliver earnings growth exceeding 30% this year – twice the rate of developed markets. Meanwhile, the relative valuation discount of Asia EM vs global DM is a further 5% lower than the average of the past decade, underscoring the region’s compelling value even after the recent outperformance.
Compared to developed markets, Asia EM present attractive dividend yields alongside higher volatility – making the region a favorable 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.
Emerging markets (EM): Our positive view on Asia ex-Japan equities supports our broadly constructive view on EM equities for the following reasons. A structural change in the makeup of the market with a shift from Latin America (commodity-focused) to Asia (technology-focused) which has grown from a 50% to 77% share of EM over the past decade. A relatively weaker USD environment has supported EM performance, alongside substantial global fund inflows into EM assets.
We see opportunities within fixed income as well, especially in dollar-denominated emerging market debt (EMD) as local currency EMD often suffers from high FX volatility. A relatively weaker USD, stronger EM economic growth and stronger credit fundamentals (especially in the high yield market) support the case for EMD.
Australia: Within developed markets, Australian fixed income stands out as one of the few markets where investors can find similar yields to the U.S., while we maintain a positive outlook on the AUD due to its carry advantage. We cover the opportunity in Australia in more detail here.
For illustrative purposes only. Estimates, forecasts and comparisons are as of the dates stated in the material. Indices are not investment products and may not be considered for investment.
All market and economic data as of February 2026 and sourced from Bloomberg Finance L.P. and FactSet unless otherwise stated.
Past performance is not a guarantee of future returns and investors may get back less than the amount invested.
JPMAM Long-Term Capital Market Assumptions
Given the complex risk-reward trade-offs involved, we advise clients to rely on judgment as well as quantitative optimization approaches in setting strategic allocations. Please note that all information shown is based on qualitative analysis. Exclusive reliance on the above is not advised. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. Note that these asset class and strategy assumptions are passive only – they do not consider the impact of active management. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Assumptions, opinions and estimates are provided for illustrative purposes only. They should not be relied upon as recommendations to buy or sell securities. Forecasts of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material has been prepared for information purposes only and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. The outputs of the assumptions are provided for illustration/discussion purposes only and are subject to significant limitations.
“Expected” or “alpha” return estimates are subject to uncertainty and error. For example, changes in the historical data from which it is estimated will result in different implications for asset class returns. Expected returns for each asset class are conditional on an economic scenario; actual returns in the event the scenario comes to pass could be higher or lower, as they have been in the past, so an investor should not expect to achieve returns similar to the outputs shown herein. References to future returns for either asset allocation strategies or asset classes are not promises of actual returns a client portfolio may achieve. Because of the inherent limitations of all models, potential investors should not rely exclusively on the model when making a decision. The model cannot account for the impact that economic, market, and other factors may have on the implementation and ongoing management of an actual investment portfolio. Unlike actual portfolio outcomes, the model outcomes do not reflect actual trading, liquidity constraints, fees, expenses, taxes and other factors that could impact the future returns. The model assumptions are passive only – they do not consider the impact of active management. A manager’s ability to achieve similar outcomes is subject to risk factors over which the manager may have no or limited control.
The views contained herein are not to be taken as advice or a recommendation to buy or sell any investment in any jurisdiction, nor is it a commitment from J.P. Morgan Asset Management or any of its subsidiaries to participate in any of the transactions mentioned herein. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit and accounting implications and determine, together with their own financial professional, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yield are not a reliable indicator of current and future results.
Diversification and asset allocation does not ensure a profit or protect against loss.
Investments in commodities may have greater volatility than investments in traditional securities, particularly if the instruments involve leverage. The value of commodity-linked derivative instruments may be affected by changes in overall market movements, commodity index volatility, changes in interest rates, or factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Use of leveraged commodity-linked derivatives creates an opportunity for increased return but, at the same time, creates the possibility for greater loss.
When investing in mutual funds or exchange-traded and index funds, please consider the investment objectives, risks, charges, and expenses associated with the funds before investing. You may obtain a fund’s prospectus by contacting your investment professional. The prospectus contains information, which should be carefully read before investing.
Structured product involves derivatives. Do not invest in it unless you fully understand and are willing to assume the risks associated with it. The most common risks include, but are not limited to, risk of adverse or unanticipated market developments, issuer credit quality risk, risk of lack of uniform standard pricing, risk of adverse events involving any underlying reference obligations, risk of high volatility, risk of illiquidity/little to no secondary market, and conflicts of interest. Before investing in a structured product, investors should review the accompanying offering document, prospectus or prospectus supplement to understand the actual terms and key risks associated with the each individual structured product. Any payments on a structured product are subject to the credit risk of the issuer and/or guarantor. Investors may lose their entire investment, i.e., incur an unlimited loss. The risks listed above are not complete. For a more comprehensive list of the risks involved with this particular product, please speak to your J.P. Morgan representative. If you are in any doubt about the risks involved in the product, you may clarify with the intermediary or seek independent professional advice.
Index definitions:
S&P 500: A free‑float market‑cap‑weighted index of 500 leading U.S.-listed large‑cap companies designed to represent the performance of the U.S. equity market.
Straits Times Index: Singapore’s headline equity benchmark, comprising the 30 largest and most liquid companies listed on the Singapore Exchange and weighted by free‑float market cap.
MSCI Asia ex-Japan Index: A free‑float market‑cap‑weighted index of large and mid‑cap equities across developed and emerging Asian markets excluding Japan.
MSCI China: A free‑float market‑cap‑weighted index of large and mid‑cap Chinese equities across eligible listings and share classes.
MSCI Taiwan: A free‑float market‑cap‑weighted index capturing large and mid‑cap Taiwanese equities to represent the investable Taiwan market.
MSCI Korea: A free‑float market‑cap‑weighted index covering large and mid‑cap South Korean equities that reflect the country’s investable universe.
MSCI India: A free‑float market‑cap‑weighted index of large and mid‑cap Indian equities designed to represent the investable Indian market, subject to foreign ownership limits.
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