El Niño, AI capex and a stronger Singapore dollar reshape where returns come from.
Singapore’s equity market is being shaped by six distinct investment themes heading into the second half of 2026, according to RHB.
The house identified financials, food security, AI infrastructure, the Singapore dollar’s safe-haven status, real estate investment trusts and small-to-mid cap data centre stocks as the key areas of opportunity.
On financials, RHB said market swap pricing suggests the current US Federal Reserve funds rate would hold steady, with a bias for a potential hike later in the year that could be positive for net interest margins. The house said investors should view banks primarily as an income and capital return allocation rather than a growth play, with potential upside from the rate debate.
On food and inflation, RHB flagged two converging forces. Headline inflation is expected to accelerate to around 4% in the second half of 2026 on the delayed effect of higher energy prices.
Separately, an El Niño system is building towards a potentially strong event, with an 88% probability of peaking between November 2026 and January 2027, threatening palm oil yields and food prices. In previous strong El Niño periods, yields declined by 14% to 17% with a one-year lag, and crude palm oil prices rose by up to 29% in the 12 months after the event ended.
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