Stocks of Singapore’s equity markets have not been as badly affected as their counterparts in other regions of Asia due to the ongoing trade war between China and United States. Analysts said that though the trade war has impacted Singapore’s economy it has not created a major impact on share market due to its position as the traditional financial hub out South East Asia. It could also be due to the fact that corporates of Singapore offer good returns and their dividends are among the highest in Asia.
The real estate market which is controlled by real estate investment trust (REIT) is also very large and has been able to keep the industry afloat. They say that equity market of Singapore is considered safe and profitable due to the regulations of REIT. As it was one of first nations in Asia to launch REIT regulations it managed to attract larger number of listings from local private enterprise and also from international players.
This has helped the market to remain strong and attract several despite low yields in several parts due to low interest rates. When markets in Singapore closed last Friday, Straits Times Index reported increase of more than 2.4 % since early this year. As the local economy is dependent on exports it has suffered due to the trade war and contracted by 3.3 % during the second quarter of April to June. This sharp fall had some analysts declaring that recession may be close.
The nation’s currency remains fairly stable due to policy of Monetary Authority of Singapore that allows it to float against basket of currencies, which has enhanced Singapore’s attraction for investors. Besides safe investments, firms listed in Singapore also offer investors an opportunity to invest in growing sections of Southeast Asia. But analysts say that this Asian powerhouse could still witness challenges ahead as in recent years two large brands namely Sea Group and Razer moved out from Singapore to New York and Hong Kong.