DBS, CapitaLand and more: Singapore's long term wealth creation set to boost local stocks, says Morgan Stanley
[SINGAPORE] As Singapore reaches its 60th birthday, Morgan Stanley says the city-state is 'prime for wealth creation'.
That could unlock real gains for investors, the investment bank said in a report released on Jun 24.
Tapping its global leadership as a data, energy, finance and transport hub, combined with rapid adoption of emerging technologies, Singapore is set to build upon its extraordinary economic success, the bank said.
'The next step forward, we believe, will be wealth creation – building upon Singapore's established brand and economic success to further grow the country's capital and global financial standing,' it said.
'In our view, Singapore needs to pursue broad-scale wealth creation to keep its ageing population both happy and healthy – and in doing so could unlock real gains for investors,' Morgan Stanley added.
It forecast a five-year GDP compound annual growth rate (CAGR) of 3 per cent – the highest among developed economies – and expects household net assets to nearly double to US$4 trillion by 2030.
A NEWSLETTER FOR YOU
Friday, 8.30 am Asean Business
Business insights centering on South-east Asia's fast-growing economies.
Sign Up
Sign Up
The bank also predicts that stock market capitalisation will double by 2030.
Morgan Stanley identifies three key pillars set to underpin Singapore's wealth creation.
Hub industries
Singapore's hub industries – spanning energy, finance, transport and increasingly data infrastructure – now contribute about 63 per cent of gross domestic product.
The city-state is already a major centre for global energy and metals trade, handling around 20 per cent of total trade and hosting over 400 international trading firms, Morgan Stanley noted.
In finance, Singapore remains a critical hub for Asian foreign exchange trading, insurance and asset management.
Tourism is also being scaled up under the Singapore Tourism Board's 2040 roadmap, which aims to raise tourism receipts to S$50 billion.
Crucially, Singapore is now emerging as a regional data and artificial intelligence (AI) inference hub, Morgan Stanley said. Asia is expected to host over one-third of global data centre capacity by 2027, and Singapore is among a few key markets – alongside Malaysia and Japan – set to get 'disproportionate' investments from hyperscalers such as AWS, Microsoft and GDS.
Early adoption of new technologies
Singapore has made rapid strides in AI, with over 1,000 startups, 150 research and development teams and more than 80 active academic AI faculties, the investment bank said.
It ranks among the top 10 global AI markets and is now positioning itself as a regional AI inference hub.
Autonomous vehicles (AVs) are another area of national focus. Singapore rolled out provisional AV standards as early as 2019 and has approved 13 AVs for public road trials. Key commercial use cases are likely to emerge in logistics, mobility and municipal services.
Robotics adoption is also accelerating, especially in the form of humanoids deployed in airports and transport nodes.
To support these energy-intensive technologies, Singapore is also investing heavily in future-proofing its power infrastructure, said the bank. Plans are underway to add 3 gigawatt (GW) of green hydrogen and gas-fired capacity by 2030, with a further pipeline of more than 7 GW of renewables, including potential nuclear generation, in the longer term.
Equity market reforms
Singapore's equity market – long seen by global investors as 'small, safe and boring' – is on the cusp of a transformation, said Morgan Stanley. With a limited supply of new economy listings and low trading liquidity, the market has often been overlooked, despite its solid fundamentals and stable institutional base.
But this perception could be about to shift dramatically, said the bank. In 2025, Singapore channelled billions in national reserves and third-party funds into the domestic market, and explored a 'value-up' programme modelled after successful initiatives in Japan and South Korea.
'We believe this could ignite significant interest and confidence in the Singapore stock market globally and potentially underpin a multiyear re-rating in valuation multiples,' it added.
Below are some stocks that Morgan Stanley earmarked as potential beneficiaries.
Large cap opportunities
Sembcorp Industries
The utilities group is set to benefit from Singapore's growth ambitions in carbon trading and solutions for industrial customers, as well as increased electricity generation needs.
The company is already one of the highest returns on equity utilities in Asia (18 per cent) and is forecast to maintain that position as it continues to grow.
DBS
The bank is set to benefit from Singapore's deepening push towards higher return on equity wealth business, where it is already the third-largest player in Asia-Pacific after UBS and HSBC.
With a broader pivot towards higher value-add and higher-return wholesale banking services, the group is forecast to maintain a robust return on tangible equity of 18 per cent.
CapitaLand Investment
The largest real estate investment trust (Reit) manager in Asia – by assets under management (AUM) – stands to benefit from Singapore continuing to develop as a regional Reit hub.
It plans to scale AUM to S$200 billion by 2028.
CapitaLand Ascendas Reit
Singapore's largest new economy Reit is poised to ride the wave of Singapore's continued rise as a regional Reit hub.
Morgan Stanley Research highlights a longer-term data centre opportunity worth over S$1 billion, which could catalyse further upside from the Reit's current 6 per cent yield.
Singapore Exchange
The bourse operator is likely to emerge as a key beneficiary of ongoing equity market reforms and rising volumes in FX and energy trading.
Morgan Stanley expects FY2026-2027 net profit to come in 5 to 7 per cent ahead of consensus, raising its bull-case price-to-earnings multiple to 30 times, from 26 times previously.
Genting Singapore
The company offers steady earnings and dividend visibility amid a rebound in visitor arrivals and new attractions. The stock trades at compelling valuations, with yields at over 5 per cent.
Technology-driven growth opportunities
Singapore's early move into emerging technologies is opening up new opportunities for investors, with several listed names set to ride the Republic's push into AI, automation and the digital economy.
Grab
Grab remains the market leader in Singapore's on-demand services space, generating more than 20 per cent of group revenue – and a substantial portion of earnings before interest, taxes, depreciation and amortisation (Ebitda) – from its home market.
According to Oxford Economics, Grab contributed 0.8 per cent of Singapore's gross domestic product in 2023. Its newly launched AI Centre of Excellence is expected to accelerate the group's foray into autonomous vehicles and intelligent logistics solutions.
Sea Ltd
The Singapore-headquartered tech giant is intensifying investments in AI, fintech and local talent. Its new fintech headquarters, which will house an AI research centre, is expected to support long-term growth.
Morgan Stanley Research projects revenue and Ebitda CAGR of over 20 per cent and 40 per cent, respectively, from 2024 to 2027.
Singtel
The telco is currently building Nvidia's accelerated AI factories across South-east Asia and has a partnership with Bridge Alliance.
Despite these efforts, Morgan Stanley Research notes that the market has yet to assign meaningful value to Singtel's AI initiatives.
Keppel Corp and Sembcorp Industries
Both companies are seen as beneficiaries of increased electricity and gas demand, driven by growth in Singapore's core hub sectors.
Keppel, in particular, is targeting S$200 billion in AUM as it aligns with global megatrends including the energy transition and sustainable infrastructure development.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
an hour ago
- Business Times
TSMC unit to issue US$10 billion of stock to counter forex swings
[TAIPEI] Taiwan Semiconductor Manufacturing Co's overseas unit is set to issue US$10 billion worth of new stock to shore up its forex hedging operations, making its biggest such move to counter a volatile local currency. TSMC Global is poised to issue the shares to help it hedge against forex swings, the company said in a statement. It's the third such deal since 2024, and by far the largest. They occurred during periods when the Taiwan dollar tended to appreciate. The moves grant TSMC Global – the vehicle responsible for managing overseas investments and hedging – more capital flexibility in managing exchange rate risks. Recent gains by the Taiwan dollar have caused worries in Taipei about the economy's heavy reliance on exports. In May, the currency notched its biggest single-day gain since the 1980s, spurring calls from the central bank to curb speculation. 'Generally speaking, the heightened forex volatility would mean that banks may be adjusting their margin requirements,' said Philip McNicholas, Asia sovereign strategist at Robeco based in Singapore. 'Issuing new shares, and bringing in an immediate cash injection, may help companies manage the margin requirements on both existing and new hedges.' TSMC, the main chipmaker to Apple and Nvidia, is by far the island's biggest company and exporter because the majority of its production is domestic. A stronger Taiwan dollar hurts exporters because the US dollars they earn from sales abroad would translate into less of the local currency, or they would need to raise their prices overseas and risk denting demand. In June, chief executive officer CC Wei told shareholders the company's operating margin has fallen several percentage points because of a stronger local currency. BLOOMBERG
Business Times
an hour ago
- Business Times
Keppel partners AIIB for up to US$1.5 billion in Asia-Pacific green infrastructure deals
[SINGAPORE] Asset manager Keppel has partnered Asian Infrastructure Investment Bank (AIIB) to facilitate up to US$1.5 billion worth of sustainable infrastructure investments and financing opportunities in Asia-Pacific. The tie-up will last for an initial five-year period up to December 2030, and focus on funding infrastructure projects developed by Keppel and invested by its private funds, the company announced on Wednesday (Jun 25). The projects will advance green infrastructure, connectivity and technology-enabled infrastructure. Areas of interest include power transmission and distribution, renewable energy, transportation and urban services. Asia-Pacific faces a 'significant infrastructure gap' due to the demands of a rapidly urbanising population, said Christina Tan, Keppel's chief executive for fund management. She believes that the partnership will combine the AIIB's financial strength with Keppel's track record in large-scale infrastructure projects, highlighting that both have a 'longstanding relationship'. Headquartered in Beijing, the AIIB is a multilateral development bank focused on developing Asia. It provides long-term capital through both debt and equity financing. The partnership is not expected to have any material impact on Keppel's earnings per share for the current financial year. Keppel shares ended Wednesday flat at S$7.40.
Business Times
an hour ago
- Business Times
Thailand moves to recriminalise cannabis, shaking US$1b industry
[BANGKOK] Thailand's government is moving to recriminalise cannabis, plunging into limbo an industry estimated to be worth over US$1 billion that has boomed since the substance was taken off the country's narcotics list in 2022. The push to impose new controls on recreational use of cannabis comes after the Bhumjaithai Party, which championed its legalisation, withdrew from the ruling coalition last week following Thai Prime Minister Paetongtarn Shinawatra's apparent mishandling of a border row with Cambodia. Late on Tuesday, Thailand's health ministry issued an order prohibiting the sale of cannabis for recreational use and making it mandatory for any retail purchase to require a doctor's prescription. The new rules will come into effect once they are published in the Royal Gazette, which could happen within days. 'Cannabis will be classified as a narcotic in the future,' Health Minister Somsak Thepsuthin said on Tuesday. Three years ago, Thailand became one of the first countries in Asia to decriminalise the recreational use of cannabis, but without any comprehensive rules to govern the sector. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Since then, tens of thousands of shops and businesses selling cannabis have sprung up across Thailand, many of them located in the country's tourism hubs. Thai Chamber of Commerce previously estimated the industry, which includes medicinal products, could be worth US$1.2 billion by 2025. Unregulated access to cannabis has created serious social problems, particularly for children and young people, said government spokesman Jirayu Houngsub. 'The policy must return to its original goal of controlling cannabis for medical use only,' Jirayu said in a statement. The recriminalisation push has left some cannabis industry members like Punnathat Phutthisawong, who works at the Green House Thailand dispensary in Bangkok, stunned. 'This is my main source of income,' Punnathat, 25, told Reuters. 'Many shops are probably just as shocked because a lot of them invested heavily.' The cannabis sector could have transformed Thai agriculture, medicine and tourism, but uncertainty and policy reversals have stymied any sustainable growth, said cannabis activist Chokwan Kitty Chopaka. 'The cannabis industry has become a hostage to politics,' she said. On Wednesday, there was still a steady trickle of customers – mainly tourists – coming into cannabis shops in Bangkok's Khao San Road area, among them Daniel Wolf, who is visiting from Australia. 'There are shops everywhere, so how do they reverse this? I don't think they can,' he said, ' It's absolutely insane.' REUTERS
