Strategic Insights: Singapore Stocks – A Safe Haven?

As part of a new series showcasing insights from top financial experts, this article was contributed by financial strategist and founder of Weipedia, Wong Kon How.

Who says Singapore stocks are boring?

Last week, the STI Total Return Index, which is built on price returns and reinvested dividends, made an all-time high and traded above 6,000 for the first time. Singapore stocks are known for their generous dividend payouts. In absolute returns, if to include compounded reinvested dividends, we will see Singapore equities in a different light. 

Source: TradingView 

Cannot ignore the grey rhino

A 'grey rhino' is a term used to describe a highly probable, high-impact, yet neglected threat. US bonds, specifically US T-Bonds, are considered to be at risk of crashing, and inflation fear still linger, yet US Indices are at an all-time high. This clear sign of divergence is being ignored by most investors, despite its potential global impact.

Source: Tradingview 

Flight to quality to Asia 

Flight to quality refers to the phenomenon where investors move their investments from higher-risk assets to safer ones during times of economic uncertainty or market volatility, and it is already happening, with more funds flowing into Asia.

• Foreign Direct Investment: 50% of global FDI into Asia

• Asia is 70% of world’s growth

• Singapore, being a hub, will tend to benefit 

Investment strategy: In a higher inflation environment leading to higher interest rates, I will maintain accumulating low gearing and dividend payout companies. I will add-on when STI close above its critical resistance. 

Source: TradingView

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