As global equity markets fluctuate due to inflation fears and unfavorable news from the US and China, investors are watching Singapore relatively robust stock market closely. The proportion of defensive stocks such as banks is high, and its low valuations and high dividends make it a relatively safe investment opportunity.
Singapore’s Straits Times Index (STI) rose more than 8 percent through the 28th of this year, according to the Singapore Exchange (SGX). Singapore Exchange’s STI index includes the top 30 companies listed on the Singapore’s Exchange.
Over the same period, Hong Kong’s Hang Seng Index tumbled 11 percent. Hang Seng fell more than 20% from its 52-week high.
Also over this period, Morgan Stanley Capital International’s Asia Pacific Index (excluding Japan) declined more than 3%.
Dow Jones Industrial Average, which rose for five consecutive quarters, fell about 3 percent this month.
According to Kamen Lee, strategist at OCBC Bank Singapore, the Singapore market has been well defended by the global market.
Despite rising U.S. interest rates putting pressure on technology and growth stocks, 80% of STI’s constituents are in traditional industries. The share of tech stocks is among the smallest in Asia.
In comparison to Asia’s major stock markets, valuations are still low and dividend levels are high, which attracts investment. In addition, expectations are high that the Singaporean authorities will be able to ease the limit on bank dividends introduced during the pandemic last year.
Singapore three largest banks, DBS, OCB, and OCBC, account for about half of Singapore’s stock market.
There is also momentum to revitalize IPOs. On the 17th, Singapore announced that it will set up a government fund to help local companies go public. Temasek, an investment company subordinate to the Singapore government, will set up the $1.1 billion fund.