Singapore's $520 Billion Market Looks Past Recession Risk
Added 07-18-19 10:04:02pm EST - “(Bloomberg) -- Investors are sanguine about Singapore's equity market even as the nation faces the risk of a technical recession, as a positive outlook for dividends and earnings overshadows threats from the U.S.-China trade spat.Singapore's…” - Finance.yahoo.com
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(Bloomberg) -- Investors are sanguine about Singapore’s equity market even as the nation faces the risk of a technical recession, as a positive outlook for dividends and earnings overshadows threats from the U.S.-China trade spat.
Singapore’s trade-reliant economy unexpectedly contracted by 3.4% in the June quarter from previous three months, reflecting sluggish global trade and electronics cycles. Following the data release, the International Monetary Fund on Monday cut Singapore’s 2019 growth forecast to 2% from 2.3%.
The benchmark Straits Times Index, on the other hand, has surged 9.8% this year. The gauge is among the best performers in Southeast Asia and is expected to rise further. The reason behind such optimism is more than half of the 30-member gauge generate 50% or more of their revenues outside the city-state, hence less influenced by the domestic economy, data compiled by Bloomberg show.
While the economy is important, “with more companies deriving a bigger percentage of their earnings from outside of Singapore, the impact on the stock market is now less acute than two to three decades ago,” said Carmen Lee, head of investment research at Oversea-Chinese Banking Corp. “The stock market is decoupled from the economy because many of the companies on the stock market are more defensive.”
Here are three charts showing the divergence of Singapore’s economy from its $520 billion stock market:
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