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Singapore ETFs
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About Singapore ETFs |
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Singapore ETFs Overview and forecast
Singapore is a unique global economy. Only Hong Kong is similar, but Hong Kong has traditionally been part of larger economic entities. Singapore is a nation. It's one of the larger, more successful economies in Asia, and has a large capital investment market. That's reflected by its ishares representative, iShares MSCI Singapore Index Fund (AMEX:EWS) which is a heavily trader oriented ETF, trading in millions of units. I has a $1.5 billion asset base, and 129 million units not yet issued.
Singapore is a popular place for Asia's capital interests. The Chinese interests are particularly strong, and Singapore is perhaps the best of the great success stories of the overseas Chinese in the region. The natural affinity with China definitely hasn't done Singapore any disservice. Singapore has done well out of the big Chinese boom years, and so has its capital market.
EWS is a high intensity trader, a reflection of the nature of the Singaporean economy. The ETF has gone through a lot, in terms of price moves, from the Pacific meltdown of 1998 to the crash of 2008, but the level of trading since 2006 has been consistently high.
It will be noted that charts for the November 2008 period to the March 2009 period look quite unlike other ETF charts. EWS had quite a different response to the crash, and it's obvious that traders kept right on trading, and even pushing the ETF back up, several times during that grim period. Another Singapore ETF, NETS FTSE Singapore Straits Times Index Fund, was taken off the market during this period. EWS is definitely a survivor.
Short term (6 months)
Trading is likely to push EWS up if it can. The short term upside is relatively good, assuming no significant economic problems emerge during this time. The combination of Chinese investment and even a comparatively flat global economy would equate to business as usual, for EWS.
However- It must be borne in mind at all times that this is an economy which is hardwired into the global economy. Singapore is directly affected by any global phenomena, and not insulated at all from the shocks. Its capital economy is strong, but the investment market has shown itself highly reactive.
Medium term (2 years)
The good thing about Singapore's global interactions is that it benefits directly from global trade. It handles a large percentage of the world's oil and shipping, and has a highly developed financial market where Asia likes to put its money on a regular basis. The medium term, if it shows anything like a return to a normal global economy, will be all positive for Singapore.
At this point difference between the medium and long term perspectives has to be defined. Singapore, as a global trading center, is also evolving. The medium term won't see much of a major departure from the business model, but Singapore is in the process of reinventing itself along 21st century lines, and it's quite possible that the normal domestic economics will change.
Long term (5 years)
Singapore is a small island. Its economy has long outgrown its origins as a shipping and commerce centre, big and busy as those parts of its economy are. It's also a very modern country, and its natural path for growth is in the capital markets. Singapore is ideally placed to develop its business interests in external capital and income sources in the New Economy.
The obvious fact is that global capital markets are also outgrowing their old models. Singapore can easily implement new trading strategies in the capital arena. It wouldn't be at all surprising to see Singapore develop itself into an Asian Switzerland, being so well located near the large capital economies of India, China, Japan, Australia and South Korea. If so, the investment market, and a far more highly capitalized pan- Asian investment scenario is very likely. That means index based investments like ETFs will be a commodity in their own right. The long term projections for Singapore are potentially fascinating.
Qualifiers to projections
Being a unique economy, there aren't a lot of precedents for predicting Singapore's possible development, but one possible qualifier to Singapore's situation is based on general mutterings from the Singaporeans themselves. The domestic economy has been under price pressures. Singapore has to import a lot of materials, and the effect on the local economy has caused some grievances.
Whether or not that can actually undercut Singapore's obviously strong capital macroeconomic position in the long term is highly debatable, but it can affect the domestic capital investment situation, rapidly. ETFs tend to have their own national characteristics. A drop in local investment, such as investment externally, looking for higher returns, could undermine the local market. Investors are advised to use a risk management approach, and watch the volumes of trade.
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Last Updated on: 2010-01-14 02:03:40 |
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