Summary：OCBC confident SGX small‑mid stocks will thrive amid Singapore growth, despite regional tensions

OCBC confident SGX small‑mid stocks will thrive amid Singapore growth, despite regional tensions

**Introduction**
OCBC Bank’s research team released a note on Tuesday expressing optimism that Singapore‑listed small‑ and mid‑capitalisation stocks will outperform larger peers in the coming quarters. The analysts cite the city‑state’s resilient domestic demand, supportive fiscal measures, and a gradual pick‑up in private‑sector investment as the primary drivers. While geopolitical friction in Southeast Asia continues to simmer, OCBC believes the local equity market’s fundamentals provide a cushion that could shield smaller companies from external shocks.

**Key Developments**
The report highlights three recent developments that underpin the bullish stance. First, Singapore’s GDP expanded by 3.2 % year‑on‑year in Q2, surpassing market expectations and signalling a broader recovery beyond the export‑reliant sectors. Second, the Monetary Authority of Singapore kept its policy band unchanged, reinforcing a stable monetary environment that lowers financing costs for mid‑size firms. Third, several SGX‑listed small‑mid caps reported better‑than‑expected earnings upgrades, particularly in the technology, healthcare, and consumer services segments, reflecting improved operating margins and stronger order books.

**Industry Analysis**
From an industry perspective, small‑ and mid‑cap stocks tend to be more sensitive to domestic economic cycles than their large‑cap counterparts, which often derive a significant portion of revenue from overseas markets. OCBC’s analysis shows that the current upswing in consumer spending—boosted by government stimulus vouchers and a rebound in tourism—has directly benefited retail, logistics, and leisure companies that dominate the small‑mid cap space. Moreover, the bank notes that valuation multiples for this segment remain attractive relative to historical averages, with price‑to‑earnings ratios hovering around 12× compared to the 15× average for the Straits Times Index. This valuation gap, combined with improving earnings trajectories, creates a potential re‑rating catalyst.

**Future Outlook**
Looking ahead, OCBC projects that Singapore’s GDP growth will hover between 3‑4 % for the remainder of 2025, supported by continued public‑infrastructure spending and