The U.S-China trade war has proven that it isn’t just a problem between the two countries. The dispute has also been rattling other countries.
Singapore, an island city-state that has enjoyed a robust economy for many years, is not spared from the challenges posed by the trade war. Singapore has been underperforming since the start of the year. Therefore, many analysts have predicted that the country will enter a recession in the third quarter of 2019.
However, despite the current big hits the country is taking, Singapore stocks remain attractive compared to the rest of Asia, according to analysts interviewed by CNBC.
“The trade war impacts (Singapore) quite a bit, but at the same time, I think Singapore stocks have an advantage relative to other Asian markets,” said Vasu Menon, executive director of investment strategy at Singapore’s OCBC Bank. “Singapore companies offer you pretty good yield. The dividend yields in Singapore are one of the highest you have in Asia,” Menon continued. Menon also mentioned Singapore’s huge real estate investment trust or REIT.
The U.S.-China trade war, which broke out last year, has substantially affected Singapore mainly because of its great reliance on exports. The world’s two largest economies have slapped one another increased tariffs on goods worth billions of dollars.
In this year’s second quarter, the economy of Singapore suffered a contraction of 3.3%. The government last month cut its 2019 official growth forecast to between 0% and 1%. The previous forecast was from between 1.5% and 2.5%.
Singapore Dollar
REYL Singapore’s Head of Portfolio Management Daryl Liew said the Singaporean dollar still holds steady which will drive many investors.
The Monetary Authority of Singapore allows the SGD to float within a band against a basket of currencies to prevent wild fluctuations.
