ETF Trends
ETF Trends

Singapore’s economy and related exchange traded fund (ETF) have been constrained by a serious dearth in export demand. It is only a matter of time, however, before world economies resume their previous levels of consumption.

The world’s leading international bank, HSBC, released a report titled “Primal Knowledge” that revealed Singapore’s economic recovery is broadening and will continue at a rapid pace, with a likely economic expansion of 6.5% in 2010, as stated in The Straits Times. For the third quarter, manufacturing increased 8.3% year-over-year, construction expanded 12.4% and services grew 2.4%. (What’s happening in Asia?)

The HSBC report points to fundamental drivers as a reason to be optimistic about Singapore’s export industry:

  • Asian domestic demand is reviving as consumers begin to spend and invest more, which will help boost incomes and encourage further growth in consumption and investment.
  • Furthermore, HSBC’s own lead indicator has entered positive levels, indicating a strong export recovery in the second half of 2009. (What’s holding back Singapore’s ETF?)
  • Electronics output in Singapore jumped 40% between March and September 2009, thought it is still below its peak. Property values have also risen almost 16% in the third quarter compared to the 2nd quarter, and the government has taken steps to prevent possible asset bubbles.

Singapore’s government believes the economy will expand as little as 3% in 2010 while the Trade and Industry Ministry expects growth of 3% to 5% next year, according to the Associated Press. According to the ministry, GDP grew an annualized 14.2% in the third quarter, but is expected to shrink 2% to 2.5% this year.

For more information on Singapore, visit our Singapore category.

  • iShares MSCI Singapore Index (NYSEArca: EWS): up 63.4% year-to-date

ETF EWS

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.