STI steadies after volatile week amid Middle East tensions; SIA, SATS decline

SINGAPORE – The Straits Times Index recovered slightly to close at 4,848.25 on March 6, after falling to as low as 4,777 earlier in the week amid volatility triggered by the escalating conflict in the Middle East.

The blue-chip index had breached the 5,000-point mark before the conflict began on Feb 28, when the United States and Israel launched a military campaign in Iran.

Analysts said uncertainty is likely to persist as the conflict pushes up oil prices, with Brent crude trading at a one-year high of around US$87 a barrel on March 7.

UOB analysts wrote in a March 6 report that widening Middle East tensions and Iran’s threat to block access to the Strait of Hormuz are emerging as key threats across Asia, primarily through higher oil prices.

The Strait of Hormuz is the world’s most critical energy choke point, with around 20 per cent of global crude oil and liquefied natural gas supplies shipped through this waterway. Nearly 80 per cent of these flows are to meet Asian demand.

“Higher energy prices would weigh on consumer sentiment, real incomes and spending, as well as industrial margins for some sectors,” the analysts said.

The conflict will hit Singapore especially hard, as it is a near-total energy importer.

CGS International Securities Malaysia economist Afham Zulghafir noted that in the immediate term, the most direct and tangible impact of higher oil and gas prices will be through “higher pump prices, rising electricity tariffs and increased input costs for transport, aviation and manufacturing”.

This would likely raise overall inflation first, before spreading to other prices over time through higher transport costs and wages.

He added that heightened geopolitical risk could also dampen business confidence, which slows investment and trade activity in the long run.

Aviation takes a hit

Singapore Airlines (SIA) has been among the first businesses impacted by the conflict.

Shares of SIA fell 2.4 per cent through the week to close on March 6 at $6.65, as concerns over travel uncertainty and rising fuel costs weighed on the stock.

Still, SIA raised its fares by as much as 900 per cent, with a one-way economy ticket from London to Singapore costing around $10,000 on March 5.

Despite the higher fares, CGS International Securities Singapore senior equities analyst Raymond Yap noted that SIA flights to Europe, and on European traffic connecting to Australia, would probably benefit from higher demand and pricing on the remaining unbooked seats, as the Middle East Gulf carriers are not able to fly.

Demand for SIA’s cargo services to Europe and Australia would also benefit from the temporary absence of the Gulf carriers, he said.

Mr Yap added that SIA typically hedges almost 50 per cent of its fuel needs for the next three months, so the airline would be protected from higher fuel prices to some extent.

SATS fell around 4 per cent through the week, closing on March 6 at $3.65.

The ground handling and in-flight catering service provider said in a March 6 statement that operations at its Middle East stations in Saudi Arabia and Oman have been continuing under “appropriate” safety and security protocols.

Still, the firm said it is “closely monitoring” the Middle East war and is “deeply concerned” about the unprecedented airspace closures in some Gulf states that are affecting the global air cargo supply chain.

SIA Engineering also fell, closing on March 6 at $3.22, down by more than 6 per cent through the week.

SIA Engineering will be replacing CapitaLand Ascott Trust on the STI reserve list come March 23, STI administrator FTSE Russell said on March 5.

The STI reserve list is made up of the five highest-ranking non-constituents by market capitalisation. Stocks on the reserve list will replace any STI constituents that become ineligible as a result of corporate action.

There will be no changes to the 30 constituents on the index after its latest quarterly review.

Defence, and offshore and marine counters gain

ST Engineering was among the gainers, with its shares up more than 10 per cent through the week to finish at $10.95.

Analysts expect ST Engineering’s defence and public security segment to drive growth as rising geopolitical tensions lift global defence budgets.

The group had already doubled its international defence wins to $600 million in 2025 and is targeting $1.2 billion in 2026.

Offshore and marine players might also see upside due to the higher oil prices, said CGS analyst Meghana Kande.

She said that if oil prices stay elevated for longer, the industry could see an increase in capital expenditure spending by oil majors, potentially leading to more oil- and gas-related orders and higher demand for offshore support vessels.

This could benefit small-cap offshore and marine players, like Marco Polo Marine and Nam Cheong, at a time when more small- and mid-cap firms on the Singapore Exchange (SGX) are also expected to get a boost from the Equity Market Development Programme (EQDP).

The EQDP, which was expanded by $1.5 billion to $6.5 billion during Budget 2026, was launched in July 2025 as a $5 billion initiative to invest in and boost the vibrancy of the Singapore stock market.

The Monetary Authority of Singapore (MAS) has so far allocated some $3.95 billion to nine fund managers to invest in local stocks, including Manulife Investments, which gave details of its new Singapore-focused equity and income growth strategy on March 3.

Manulife said its strategy is aimed at capturing the opportunities emerging as MAS’ enhancements strengthen the overall ecosystem, particularly in areas of the market that remain under-researched.

The new strategy will see it invest exclusively in Singapore-listed equities and equity-related securities, with a particular emphasis on small- and mid-cap companies.

Manulife noted that “lower coverage and persistent valuation inefficiencies” in this segment create a “compelling opportunity set”.

SGX sees new listings

UI Boustead Real Estate Investment Trust (REIT) has launched an initial public offering that will raise $973.6 million in the largest IPO to date in 2026.

It also marks the first REIT listing on the SGX mainboard in 2026.

The public offer consists of 677.2 million units at 88 cents apiece that will raise $595.9 million. The offer will close at noon on March 10 and trading will begin at 2pm on March 12.

Singapore’s first home-grown physical gold exchange-traded fund (ETF) will be making its listing debut on the SGX on March 26.

Called the LionGlobal Singapore Physical Gold ETF, it will be traded in both Singapore dollar and US dollar denominations.

The initial offer period for the ETF is from March 6 to 20.

Other market movers

Mainboard-listed CSE Global jumped by almost 4 per cent to close at $1.31 on March 6.

The company on March 5 said it is undergoing a strategic review after a request from controlling shareholder Heliconia Capital Management.

The strategic review includes an analysis of strategic options available to the company and an analysis of possible transactions involving the company’s shares and/or all or part of the company’s business and assets, among other issues.

CSE Global’s net profit surged 87.1 per cent to $21.2 million for the second half ended Dec 31, from $11.3 million in the year-ago period.

Hongkong Land closed on March 6 at US$8.38, up by 2.82 per cent.

The property developer posted its full-year results on March 5. It saw underlying profit drop 8 per cent to US$458 million (S$585.8 million) for the financial year ended Dec 31, from US$499 million in the previous financial year.

The lower underlying profit was primarily due to decreased contributions from the Hong Kong Central portfolio, the firm said.

Meanwhile, DFI Retail Group saw underlying profit jump 35 per cent for the year ended Dec 31.

Its profit increased to US$270 million for the 2025 financial year, an increase from US$201 million for the previous financial year. The retail company closed on March 6 at US$4.34, down 1.36 per cent.

What to look out for next week

Financial markets will be closely watching the conflict in the Middle East and how it affects oil prices.

A conflict extending beyond four to six weeks will have more major macroeconomic implications, especially with the disruption to trade, travel and energy markets, analysts said.