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Singapore’s bond market remains attractive amidst international upheaval

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Tense negotiations between the United States and China have beset international markets lately, with stocks and bonds suffering as a result of the economic upheaval emanating from the world’s two most-powerful cities.

Singapore’s bond market has remained robust and attractive amidst this international upheaval, however, with analysts making clear note of the city-state’s potential in recent musings. 

Positively-yielding bonds are difficult to come by when international markets are upset by political tensions, particularly if the near-future of a particular country is called into question by a wide enough array of investors. Singapore’s bond market has remained surprisingly strong in recent years partially because it’s remained relatively tranquil and dependable despite global turmoil that’s disrupted other marketplaces. 

According to the Straits Times, for instance, Singapore still pays the highest returns among economies with AAA credit ratings from all major rating agencies. Investors are thus confident that purchasing bonds from Singapore will yield positive results over time, whereas purchasing from other states (e.g. the trade-war-embroiled U.S. and China) would be riskier and in some cases not worthwhile at all.

Singapore skyline
Image: Sven Scheuermeier on Unsplash

AAA credit ratings are particularly enviable because they guarantee to outside investors that your bond market is credible, stable, and unlikely to tank anytime soon. 

Deutsch Bank recently made the case for investing in Singapore, arguing that the diverse class of assets available for investors to bet on renders it an ideal investment location. According to Deutsch Bank’s website, “the Singapore dollar has proven to be less volatile in times of global financial crisis. An open financial system and capital markets backed by strong reserves can boost investor confidence and draw investment flows into the country.”

Given the ongoing economic turmoil stemming from negotiations between the United States and China, it stands to reason that the robust and stable Singapore dollar will thus appear to be a safe bet to many international investors seeking temporary safe-havens for their money. With a buoyant economy boosted by tourists from India, who are enjoying a Malaysia visa for India, Singapore has a promising outlook.

Peril has grown so elevated in recent weeks that strategists on Wall Street are now warning about a forthcoming global recession, according to CNBC, with high volatility expected as a direct result of the tense nature of ongoing negotiations.  

Like any internationally-involved economy, Singapore can’t totally isolate itself from volatility elsewhere, yet the robust nature of the city-state’s bond market has inured it to sudden jolts likely to occur in other markets. Singapore’s confidence is reflected in the city-state’s decision to sell reopened July 2029 government debt worth roughly $2.9 billion on Wednesday. 

 
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