The Straits Times Index (SGX: ^STI) posted a sterling performance year-to-date (YTD) as it broke multiple record highs.

Earlier this month, the bellwether blue-chip index crossed the 4,000-mark for the first time as it recovered from April’s tariff announcement.

Just this week, the index has shot past the 4,200 level and shows no sign of stopping.

Can this rally sustain, or should investors stay cautious for now? We unpack these developments to bring you some insights.

A broad-based rally

The surge in the STI is impressive, but investors may be surprised to note that the three local banks are not responsible for the bulk of this rise.

DBS Group (SGX: D05), which occupies the largest weight within the STI at 25.1%, saw its share price increase by a little under 10% YTD. *Note: All weights are as of 31 March 2025.

The next largest index component, OCBC Ltd (SGX: O39), takes up 16.3% of the index while Singapore’s third largest bank, United Overseas Bank (SGX: U11) or UOB, had a weight of 12.4%.

OCBC’s share price increased just 3.4% YTD while UOB’s shares inched up 1.9% YTD.

Hence, it’s clear that the banks have not contributed much to the index’s stellar performance.

So, the question is – which stocks did the heavy lifting this time?

One example is Singapore Technologies Engineering (SGX: S63).

The engineering firm’s shares soared 77.9% YTD to hit S$8.27.

Several other blue-chip stocks also posted strong share price gains.

Property developers did well, with UOL Group (SGX: U14) surging 34.9% YTD and Hongkong Land (SGX: H78) soaring 42.9%.

Sembcorp Industries (SGX: U96) leapt 41.8% YTD while Singapore Exchange (SGX: S68) saw its shares increase by 26.2% YTD.

Local telco Singtel (SGX: Z74) also posted a strong performance with its share price jumping 33.7% YTD.

Awaiting the banks’ results

These performances were achieved even when there were no major corporate announcements or earnings results.

This suggests that the optimism could be related to the recent announcement of a large, S$1.1 billion capital injection by the Monetary Authority of Singapore to revitalise Singapore’s stock market.

There could be room for the rally to continue if the banks do report robust results.

OCBC will report on 1 August while both DBS and UOB will announce their first half and second quarter earnings on 7 August.

With interest rates set to hover “higher for longer”, the lenders could enjoy an unexpected tailwind if they can maintain their net interest margins.

Fee income should also stay strong with wealth inflows into the region along with buoyant credit card spending.

As for the rest of the STI’s components, investors will also be keeping a close eye on their business updates and earnings announcements as the earnings season gets underway.

Strategic reviews to unlock further value

A catalyst that could take share prices higher is strategic reviews and long-term plans announced by several blue-chip players.

Some companies also communicated their long-term objectives via Investor Day sessions that give investors a clearer idea of what to expect.

For instance, ST Engineering released its Investor Day 2025 slides earlier this year and came up with another set of ambitious targets for 2029.

The engineering giant also announced a progressive dividend policy that will add an incremental dividend based on one-third of the year-on-year increase in net profit from 2027 onwards.

Hongkong Land also announced its strategic review late last year and has followed through with it by posting a higher year-on-year dividend for its 2024 results.

Sembcorp Industries went a step further.

The utility and urban development group not only announced its 2028 targets during its Investor Day 2023, but also announced a corporate reorganisation earlier this year.

These developments injected a much-needed dose of optimism as investors witness clear progress towards attaining these goals.

Singtel also reported a higher year-on-year dividend for fiscal 2025 and announced a S$2 billion share buyback programme to unlock more value for shareholders.

Investors will be closely scrutinising the upcoming earnings season to determine if these companies can continue to report higher profits, free cash flow, and dividends.

Get Smart: Monitor the business closely

If you are afraid of a pullback in the STI, you are not alone.

Some investors have expressed doubts about whether this surge is sustainable.

One piece of good advice is to monitor the business behind the stock.

If the business does well, the share price should naturally follow.

Singapore’s stock market is on a historic run, but can it last? We’ll explore where interest rates are heading, whether blue-chip earnings can keep growing and more.

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Disclosure: Royston Yang owns shares of DBS Group and Singapore Exchange.