The shift towards Singapore and emerging markets is in contrast to growing wariness for US Treasuries. Bhaskar Laxminarayan, chief investment officer for Asia and Middle East, says the 10-year Treasury is no longer the risk-free benchmark. “Possibly the most risky asset of all, is possibly the longer end of the Treasury, and which is why, despite the short end coming down, the long end is not coming down, and at the same time, corporate yields are crashing against the long end.”
The Singapore stock market is a “bright spot” in Asean as it will likely see further gains this year, driven by 8% earnings growth among the 30 component stocks of the Straits Times Index. In addition, there is a yield of 5%, which should make a decent expected return, says Mark Matthews, head of research for Asia at Julius Baer.
For Matthews, his confidence stems from how Singapore is a developed market where over half of the revenues come from emerging markets, primarily Asia. “So you have developed market quality corporate governance with emerging market revenue.”
