Singapore’s gross domestic product is expected to shrink 4%-7% this year, its worst contraction since independence in 1965, as the pandemic pummels the trade-reliant economy. The plunge in money-market rates came as the Monetary Authority of Singapore promised to provide sufficient financial liquidity, while the government has deployed stimulus of $92.9 billion so far.
(June 3): While a decline in interest rates is generally seen as good for stocks, the benefits of Singapore’s slide toward negative territory are far from certain.
The city-state’s overnight borrowing rate slid to within two basis points of zero last month while the one-month swap-offer rate turned negative for the first time in almost nine years. The relative appeal of the nation’s $370 billion stock market boosted by the sub-zero rates is overshadowed by the negative implications for the economy and financial system.
