ASEAN Equity Strategy: Through the Oil Shock: Five Lenses on ASEAN

Research evidence excerpt

ASEAN Equity Strategy: Through the Oil Shock: Five Lenses on ASEAN

ASEAN Equity Strategy

25 June 2026 Citi Research

Figure 16. 6M (to 1 June) currency performance vs. USD – Figure 17. Forecasted currency appreciation/depreciation

SGD – SGD had been among the safer-haven currencies outlook vs. USD based on Citi economics/FX team forecasts

over the past 6M

© 2026 Citigroup Inc. No redistribution without Citigroup’s written permission. © 2026 Citigroup Inc. No redistribution without Citigroup’s written permission.

Source: Citi Research, Bloomberg Source: Citi Research

Backdrop of potentially higher US rates and sustained low domestic rates should

still bode positively for SG equities

The market is now pricing in US Fed rate hikes, contrary to pre-Iran conflict

expectations of rate cuts. Based on Bloomberg consensus, the street is currently

expecting 1.8 rate hikes in FY26 and FY27. This is in contrast to Citi’s current house

view of 2 rate cuts. A rising rate cycle generally provides tailwinds for the market

given banks’ outsized weighting in the index.

Figure 18. Rate hike probability based on Bloomberg consensus (WIRP)

© 2026 Citigroup Inc. No redistribution without Citigroup’s written permission.

Source: Citi Research, Bloomberg

Maintaining a positive view on banks. SG banks offer an interesting barbell

opportunity to the macro backdrop. A stronger US Fed rate outlook may act as

tailwinds for SG banks with potential benefits to NIMs. On the other hand, they

would also benefit from potential improvements in wealth momentum in the event

that rates remain soft with visible and healthy benefits on deposit growth into

April. With SG banks accounting for 55% of MSCI Singapore and 53% of STI, we

see the overall index as likely well supported with rate & inflation related flow.