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SINGAPORE – The Singapore market rallied on June 15 in response to a peace deal announced by the United States and Iran that could reopen the Strait of Hormuz.
The Straits Times Index (STI) rose 1.3 per cent during the morning trading session, hitting above 5,094 at its peak.
This increase moderated to 1.1 per cent at around 3.30pm, with the index at 5,081.69.
The STI followed other Asian bourses which also rallied on the news.
Japan’s Nikkei index closed up 4.85 per cent on June 15, after setting a fresh record during intra-day trading.
South Korea’s Kospi index jumped by 5.2 per cent, while Hong Kong’s Hang Seng Index climbed by about 0.5 per cent.
The United States and Iran announced on June 14 that both nations had agreed on a framework to end the war, which includes halting the US blockade of Iran and reopening the Strait of Hormuz.
The major shipping channel for global oil and gas supplies had effectively been closed for months, pushing up oil prices and creating global inflationary pressures.
The interim agreement and news of the Strait of Hormuz reopening have been the most positive developments since the war started at the end of February, said DBS analyst Yeo Kee Yan.
However, he cautioned it could take several months for Hormuz traffic to return to pre-crisis levels.
Maybank head of research Singapore Thilan Wickramasinghe noted that the STI has had the highest opening in nearly two weeks.
“Expectations of a reopening of the Straits of Hormuz has brought relief, especially in terms of lowering energy costs. A slightly more stable geopolitical environment is likely being seen as conducive to risk-on market sentiment,” he said.
He added that this positive sentiment also resulted in broad-based re-ratings of some Singapore stocks.
Transport-related names such as ComfortDelGro and Singapore Airlines have seen upward momentum from lower fuel-cost expectations, he said.
Similarly, utility players like Sembcorp and Keppel are also in the green.
Financials, led by the Singapore Exchange (SGX), are also up on expectations of higher trading volumes and potentially higher wealth management demand, Wickramasinghe noted.
DBS’ Yeo added that sectors such as telecommunications and industrials, which includes construction companies, aviation and firms with Middle East exposure, stand to benefit from the reopening of the Strait of Hormuz.
OCBC head of equity research Carmen Lee noted that 25 out of the 30 stocks on the STI have moved higher, as at about 2pm on June 15.
“This could be due to lower energy costs, which affect companies’ operating expenses, as well as better outlook as geopolitical tensions ease, if the agreement pushes ahead when the leaders meet later this week,” she said.
As a result of the peace deal announcement, oil slumped to a three-month low, with Brent down more than 4 per cent towards US$83.
Phillip Securities research manager Glenn Thum said the markets staged a broad relief rally, and added that firms which are especially sensitive to oil costs stand to be winners of the announcement.
These include property names and real estate investment trusts (Reits), such as the Mapletree and CapitaLand trusts, Hongkong Land and City Developments, as cooler oil prices ease the inflation and rates picture, he said.
“The three Singapore banks have also rebounded with the broader risk-on move after last week’s sell-off,” he added.
However, other oil-leveraged names that were up during the war might have to return some of their risk premium. These include energy counters and offshore and marine names like Seatrium, Thum said.
Separately, the US listing of Elon Musk’s SpaceX might have indirect knock-on effects in Singapore, experts said.
Thum said the SpaceX listing might have a marginal benefit for Singapore stocks, primarily through sentiment, although its direct effect is limited.
“The broader positive is that the initial public offering signals a reopening of the global listing window, which could support growth names and SGX’s own listing ambitions,” he added.
Maybank’s Wickramasinghe said that a key growth theme for SpaceX is the rapid expansion of AI.
“Here, Singapore tech manufacturing names are beneficiaries of strong demand from their semiconductor customer base. We have seen punchy re-ratings from UMS, Frencken and AEM today,” he said.
