Singapore could be worst-hit Asian economy in full-blown euro crisis

A view of Raffles Place business district in Singapore. (AFP photo/Roslan Rahman)

SINGAPORE: Singapore is expected to be one of the worst-impacted economies in Asia, should the eurozone enter into a full-blown crisis.

This is according to a Credit Suisse report released on Thursday.

Singapore’s exports to the eurozone directly account for more than 12 per cent of its GDP, and private sector holdings of eurozone debt and equities are the highest in the world outside of Hong Kong.

In addition, eurozone banks also make up a bigger proportion of domestic bank lending in Singapore than other Asian economies.

The uncertainty in Europe has sent jitters across the Singapore stock market, with the Straits Times Index (STI) continuing to extend losses. The key benchmark index ended 0.5% or 13.07 points lower at 2,773.81 on Thursday as it struggles to find solace in the European debt crisis.

But for investors with a mid-to-longer term horizon, some analysts said the time could be ripe for selective bargain hunting for defensive stocks, such as REITS and selected blue chips like CapitaLand, which have seen prices beaten down by the current volatility.

Head of premium client management at IG Markets, Jason Hughes, said: “The valuations you’re seeing at the moment, in terms of historic levels, are quite attractive for longer-term investors to try and pick up stocks in this time.

“We’re seeing a lot of people focused on high-yielding stocks. So for someone who is focused on holding for two, three or even longer years, then now is the time to start picking up these shares at this price.”

Meanwhile, others prefer to stay away, in the lead up to big market-swinging announcements. These include the June 17 Greek elections, European and US consumer prices results and US jobless claims.

Co-head of research at DMG & Partners Research, Leng Seng Choon, said: “We are still going to see a fair bit of volatility in the equity market with a downward bias. Waiting for clearer signs that the debt problem in Europe is going to see some firm action, which will lead to a longer-term solution, would be a better time (to invest).”

The outcomes of the G20 summit and EU Summit later this month are also expected to impact Asian stock markets.

– CNA/wm

  • Whether its manufacturing or new knowledge-base venues, it was and remain true that prudent-balancing which are proactive and dynamic in steering our spending to match ever-changing uncertainties is adviseable. In the wrong hands, we would have been along the disaster path sooner than one can imagine.Hence we should remain steadfast in being prudent, rather than go the path of the politicians in greece and other short-term populist regimes. Beware of those who promise fairy-tale stories and goodies.~ netizen

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