A rally in one of Asia’s best-performing stock markets is stalling amid rising virus cases at home and a rethink of the global reflation trade.

Second only to Taiwan among Asia’s major benchmarks this year, Singapore’s Straits Times Index has slipped almost 1% so far in May, paring 2021’s gains to around 13%. The reintroduction of social distancing rules following a near doubling of new local infections has weighed on investor sentiment, despite the country having one of the highest vaccine coverage in Asia.

But this isn’t only a Singapore story. The Asian financial hub is a microcosm of the worldwide economic rebound, with exports standing at more than 150% of gross domestic product. And with an Asia-leading 86% weighting in so-called cyclicals, the STI has stuttered alongside a pause in the global rotation to such economically-sensitive shares.

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