Investors seeking to diversify their portfolios and gain exposure to the fast-growing Southeast Asia market should seriously consider buying companies listed on the Singapore stock market.
Singapore has one of the most developed and stable economies in the region.
The city state also has a strong regulatory framework and business-friendly environment that attracts both domestic and foreign investors.
So, for investors, here are some compelling reasons why they should consider investing in the Singapore stock market.
1. Strong and stable economy
Singapore has one of the strongest and most stable economies in the world.
It has a long history of political and economic stability, and its government has implemented policies that have encouraged sustainable growth and development.
As a result, the country has one of the highest GDP per capitas in the world, a low unemployment rate, and a high standard of living.
This has created a favourable environment for businesses to thrive and for investors to achieve attractive returns.
2. Strategic location
Singapore is strategically located at the crossroads of Southeast Asia, providing investors with access to a vast and diverse market.
The country is well-positioned to benefit from the growth of its neighbours, including China and India.
Aside from that, Singapore also has a strong bilateral relationship with the US. It is also the US’s largest trading partner in Southeast Asia region.
This puts Singapore in a enviable strategic position as it enjoys a positive relationship with both the US and China – despite the rivalry between the two largest economies in the world.
In addition, the country has a well-developed transportation infrastructure, including one of the busiest ports in the world, making it a hub for trade and commerce.
As seen over the last three years, Singapore was also among the first in the world to emerge and recover from the COVID-19 pandemic.
3. High-quality companies
The Singapore stock market is home to many high-quality companies, including both domestic and international firms.
Many of these companies are leaders in their respective industries and have a strong track record of generating steady profits and paying out attractive dividends to their shareholders.
For example, DBS Group Holdings Ltd (SGX: D05) is not only just the largest bank in Singapore but the largest in Southeast Asia.
It reported a record FY2022 net profit of S$8.19 billion recently, an increase of 20% from the previous year, and also raised its quarterly dividend by over 15%.
Another example is Singapore Airlines Ltd (SGX: C6L), which was recently named as the best airline for the year in 2023 at the 49th Annual Air Transport World (ATW) Airline Industry Achievement Awards.
The airline is also looking to expand into India as Singapore Airlines agreed to merge Air India and Vistara, together with Indian conglomerate, Tata.
Other large Singapore companies include the component stocks within its benchmark index, the Straits Times Index (STI).
4. Regulatory framework
The Singapore stock market is known for its strong regulatory framework, which is designed to protect investors and ensure that the market operates in a fair and transparent manner.
The regulatory body, the Monetary Authority of Singapore (MAS), has a reputation for being stringent and proactive in its oversight of the market, providing investors with confidence in the system.
5. Diversity of sectors
The Singapore stock market offers a diverse range of sectors for investors to choose from, including finance, real estate, consumer goods, and technology.
This provides investors with the opportunity to build a well-diversified portfolio that can weather market volatility and generate consistent returns.
6. Attractive dividends
Finally, the Singapore stock market is known for its REITs that offer attractive dividend yields of around 6-7%.
The valuation of Singapore REITs (S-REITs) has also become more attractive following the sell-off in the market last year amid the sharp increase in interest rates.
However, as most investors expect to see interest rate hikes gradually moderate this year, we have seen a recovery in S-REITs in 2023.
Singapore market offers attractive and stable returns
In conclusion, investors seeking to gain exposure to this region should consider investing in the Singapore stock market.
For example, Malaysia investors could also diversify their currency risk by investing in the Singapore market.
With its strong and stable economy, strategic location, high-quality companies, strong regulatory framework, diversity of sectors, and attractive dividends, the Singapore stock market offers investors the potential for attractive investment returns over the long term.
Disclaimer: ProsperUs Investment Coach Billy Toh doesn’t own shares of any companies mentioned.
