Driven by bank stocks, Singapore's stock market hit a record high on Wednesday. The STI rose over 1%, reaching a peak of 3,870.21 points.

Shares of Singapore’s biggest bank DBS soared to S$45 for the first time on Wednesday. While OCBC jumped 3.6%, UOB rose 1.6%.

Singapore and Malaysia announced on Tuesday an agreement on a special economic zone in the southern Malaysian state of Johor, aiming to support investment and free up movement of goods and people between the countries.

DBS shares have hit record highs a few times late last year, on the back of strong earnings, with OCBC and UOB also rallying strongly. DBS was the second best-performing stock for the year, rising 43.9%.

Analysts are bullish on Singapore’s three banks, believing they are set to post earnings growth in 2025 given higher-for-longer rates.

They also believed the bank sector is a beneficiary amid global market uncertainties and rising geopolitical tensions.

Among the three lenders, DBS reported the strongest wealth-management income growth in third-quarter results. It posted the second-highest net profit at 15 per cent year for the period, behind UOB’s 16.5%.

The strong performance of the banks, among other sectors, drove the Straits Times Index to a gain of nearly 17 per cent for 2024 – its best year since 2017.