3 possible risks to the stellar performance of Singapore's local exchange

Moderation of Singapore's GDP is one.

Stocks from banks, property and technology sectors has led to an 11.6% gain in the Straits Times Index for the first half of the year, but economists and analysts from DBS Group Research are wary that the local market exchange could face a choppy road going forward.

One such risk that could turn the sentiment bleak is the continued moderation in Singapore's gross domestic product growth.

"Singapore PMI retreated from its March high while NODX turned negative in April and May. The electronics cluster remains resilient although there are lingering concerns about its sustainability. The YTD rally in Singapore equity market was driven in part by the technology and manufacturing sector. This could end if the data trend continues to moderate or worse, sink into contraction," analysts from DBS said.

Additionally, DBS economist expects a faster pace at one rate hike per quarter till early 2019. "Several FED officials including Janet Yellen commented that the US stock market valuation is looking rich. The USD could strengthen and equity markets correct if FED comments hint of a more aggressive rate hike pace," the brokerage firm said.

A moderate risk is seen on earnings cut, where banks could be disappointed on their respective net interest margins (NIM), dragged by a from slower-than-expected pass through of SIBOR/SOR. Telcos, on the other hand, will be facing heated competition with the new comer, TPG.