Singapore Stocks Tumble the Most as Investors Pull Their Money Out Whereas the Singapore dollar fell 0.3 percent against the U.S. dollar last month, Singapore stocks tumbled the most among developed markets last month. The fall is attributed to the fact that investors are pulling cash from Southeast Asia as they are concerned about the future of global stimulus.
Data show that investors pulled $2.2 billion from Thailand, Indonesia and the Philippines in August. Financial analysts say that Singapore, a barometer for Southeast Asia is facing the trouble as other countries in the region face; however, it may not be its own problem.
As the other neighboring countries are not faring well, investors are probably concerned about the risk of contagion amid capital outflows from the neighboring markets e.g. Indonesia, the Philippines.
Stimulus Tapering too May Have an Impact
Market analysts admit that Fed Chairman Ben S. Bernanke’s statement that the central bank may start tapering $85 billion in monthly U.S. bond purchases if the world’s biggest economy improves may also have an impact on Singapore stocks’ performances. They also admit that as investors start to price in rising interest rates, Singapore’s high-yield REITs are appearing less attractive.
Also, Singapore is getting hit from two sides; firstly, it’s being lumped together with other Southeast Asian markets like Indonesia and the Philippines which are not faring well; and secondly, investors are selling high-yield Singapore REITs as bond yields are rising.
Market experts claim that stock prices falling in Singapore can also be due to redemptions from Asean since it’s the biggest market. They view that Singapore is being lumped together with other economies like Indonesia, Thailand and the Philippines which have been facing a grave capital outflows recently.
Other Countries in South East Asia Affected too
When major economies like India and Singapore are not faring well, contagious impact on the other economies in South East Asia is plausible. Analysts say that investors in the Southeast Asian country’s stock market are worried about the parallels with India. Like the Indian national currency, other currencies too have fallen to a great extent against the USD.
The biggest equity market in the region with $558.4 billion, compared with $455.4 billion for Malaysia, the Singapore dollar too has faced a decline. However, other currencies in the region like the Indonesian Rupiah which fell by 5.9 percent, Thai Baht fell by 2.8 percent; Philippine Peso fell by 2.5 percent and the Malaysian Ringgit fell by 1.2 percent.
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