Singapore Stocks Approach Record High as War Strengthens Safe-Haven Appeal

Singaporean Stocks on the Brink of Record High Amid Global Volatility

Singaporean stocks are on the cusp of reclaiming their record high, with the country's assets seen as a haven in the face of global volatility. Equities in the city-state have suffered the least in the region since the outbreak of the Iran war in late February sent global energy prices soaring. They're on the cusp of being the first major Asian market to reclaim new highs since, aided by the Singapore dollar's outperformance versus Southeast Asian peers.

Singapore has a couple of factors in its favor. One, its Equity Market Development Programme, created last year, is expected to pour in billions of dollars to boost valuations and appeal to investors. Two, the composition of Singapore's main stock index adds to the appeal, with high dividend-paying stocks such as DBS Group Holdings and Oversea-Chinese Banking Corp. making up more than 40% of the gauge.

The relative strength of the Singapore dollar offers safe-haven status to local equities. The EQDP efforts offer valuation support amid the global uncertainty as well. Despite the city-state's stock market having underperformed Asian stocks this week after a ceasefire announcement triggered a relief rally globally, analysts bet that further strength in the currency could provide a platform for more gains as geopolitical uncertainties drive investors to chase diversification.

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The Singapore dollar may get a boost from a possible tightening by the Monetary Authority of Singapore at its meeting on Tuesday — likely via increasing the appreciation of the Singapore dollar against the basket of currencies of its main trading partners. "Singapore is at the intersection between safe-haven flows – especially amid Middle East uncertainties – and domestic liquidity drivers brought about by market reforms and a construction boom," said Thilan Wickramasinghe, head of research at Maybank Securities. "This is supporting Singapore equities to buck the trend compared to global equities."