STI drops below 5,000 after Budget 2026, but analysts see ample ‘fiscal dry powder’

[SINGAPORE] The Singapore market pulled back on Friday (Feb 13) following Budget 2026 announcements, even as the government unveiled measures to boost existing equities, startups and new listings.

On Thursday, the Straits Times Index (STI) crossed the 5,000-point barrier before the statement was delivered, buoyed by a strong 43.5 per cent net profit increase for Singtel. It later closed 0.7 per cent up at 5,016.76 points after the Budget statement.

But the momentum did not hold. In the first hour of trading on Friday, the STI fell 1.1 per cent back below the 5,000 mark to 4,963.68 points, and fell further to around 4,955 by late morning. This drop was led by local banks’ shares; DBS fell 1.1 per cent, OCBC by 2.3 per cent and UOB , by 2.1 per cent.

Shares of Singtel dipped 0.4 per cent, ST Engineering retreated 1.3 per cent and Frencken dropped 1.6 per cent. Household spending staple Sheng Siong also fell 0.7 per cent.

The drop in Singapore’s market echoed a fall in the US, where the Dow Jones Industrial Average index declined 1.3 per cent, the S&P 500 dropped 1.6 per cent and the Nasdaq composite contracted 2 per cent.

Despite the morning dip, analysts believe the broader narrative remains positive. Growth in 2026 is expected to be underpinned by what Maybank calls a “sustained AI boom” and a “buoyant capital market” supported by falling interest rates.

The bank’s economists on Friday noted that while near-term handouts were scaled back from those given out in the 2025 election year, the Budget leaves ample “fiscal dry powder” to support the economy if needed.

In his statement, Finance Minister Lawrence Wong announced that the Equity Market Development Programme (EQDP) of the Monetary Authority of Singapore will receive further support – a S$1.5 billion top-up to the Financial Sector Development Fund. Wong is also the prime minister.

The Anchor Fund will also get more support, through a second S$1.5 billion tranche from the government and Temasek. The fund aims to attract and anchor high-quality listings.

SEE ALSO

Not only that, S$1 billion will be set aside for the Startup SG Equity Scheme, as its scope is broadened to cover growth-stage companies, instead of just early-stage startups.

Sheng Siong, ST Engineering and banks the winners

Analysts on Friday singled out winners of the budget, including domestic consumption, defence and technology as key beneficiaries.

Household support packages are expected to lift mass-market spending, favouring staples like Sheng Siong and DFI Retail , said RHB analyst Shekhar Jaiswal.

Maybank analysts said that the CDC vouchers – S$500 to each Singaporean household – would specifically sustain “heartland spending and supermarket traffic”.

The government’s readiness to spend “more than the usual 3 per cent of GDP” on defence – with the focus on unmanned systems – supports a bullish outlook for engineering firms like ST Engineering and Addvalue Tech , said Maybank.

Meanwhile, Maybank analysts highlighted the “sizeable liquidity boost” from the expanded EQDP as a key driver for the financial sector. This is expected to lift the Singapore Exchange and trading platforms such as iFAST; local banks like DBS, OCBC and UOB stand to gain from increased market activity and lower credit risks.

Finally, the push for artificial intelligence and advanced manufacturing is set to benefit tech manufacturers such as AEM , Frencken and UMS , while Keppel DC Reit is tipped to benefit from the new AI park at one-North.