An In-depth Overview of Singapore’s Market for Foreign Investors

Author: Luis Aureliano

In 2015, it was reported that Singapore investors spent a record $26.3B on buying overseas properties – an indication that Singapore has a wide pool of investment-conscious individuals with deep pockets. However, the number for Singaporean dollars making their ways to foreign investment opportunities is only a minute fraction of the money that Singaporeans spend on local investments.


Interestingly, the amount of Singaporean dollars that flows into foreign lands pales in comparison to the amount of direct foreign investments in Singapore. A large number of overseas investors have found an incredible opportunity in Singapore. This article seeks to provide the discerning investor with an objective outlook on what foreign investors can expect from the Singaporean economy.

An overview of Singapore’s stock market

Singapore boasts one of the most attractive financial and trade sectors in the global community. The country’s financial market is called Singapore Exchange Limited with a market cap of more than SGD902.425 billion ($8.19B). Credit Lyonnais Securities Asia (CLSA) has forecasted that Singapore is on track to supplant the Swiss banking industry as a destination financial center by 2025. Singapore financial market enjoys the benefits of a strategic location that makes it an ideal hub for more than 4 billion people who can jet in within a 7- hour flight radius.

Singapore’s financial markets have also enjoyed a reputation for transparency and accountability because the government has zero tolerance for corruption. In fact, there are reports that more than 7,000 multinational firms from the U.S. and E.U. and Japan have set up shop in Singapore. More so, about 3,000 firms China and India have a presence in Singapore. Hence, if you want to invest in Singapore’s stock market, you can be sure that you’ll encounter the stocks and ETFs of familiar companies.


Singapore Exchange has outperformed other Asian markets in the year-to-date period as shown on the chart above. However, Singapore Exchange has largely underperformed the U.S. and EU markets as shown the chart below.


An overview of Singapore’s real estate market

Singapore has a developed real estate market built by one of the world’s richest populations. It is no longer news that Singapore has the third highest per capita income in the world; hence, many Singaporeans have much easier access to financing for real estate investments.

More so, Singapore has one of the lowest employment rates in the world and it has the largest concentration of millionaires in any one country. In addition, the country offers a low property tax rate and an advanced infrastructure that makes it easy to do business with individuals, corporate bodies, or the government.

Nevertheless, Singapore’s real estate market has suffered a massive downturn in recent years. Many reasons have been advanced for the weakness in Singapore’s housing market and the country’s Urban Redevelopment Authority (URA) has provided data on the weakness in the housing market.

The URA observes that private residential property index fell by 0.6% in Q2 2016 to mark the ninth straight quarter of declines. More so, the URA noted that the prices of residential properties fell by 0.4% during the quarter and price of high-end, non-landed homes fell slightly by 1.4% quarter over quarter in Q1 2016.

The currently depressed nature of the Singaporean real estate market might provide investors with a remarkable opportunity to buy prime properties in great locations at a discount. For instance, buyers are snapping up well-positioned projects and foreign developers are buying up new sites aggressively. The URA reported a sharp increase in the number of private housing units that developers launched and sold in the second quarter as shown in the chart below.

Real Estate1

However, it is important that you conduct your due diligence and not buy a piece of Singapore’s real estate with misplaced expectations. You should be ready to buy Singapore real estate with a medium to long-term view in mind.

Is this a good time to invest in Singapore?

Foreign investors should be pleased to know that this is a good time to invest in Singapore’s market because of the latent opportunities in Singapore’s economy. However, foreign investors might want to make a strategic entry because Singapore Dollar has strong bullish trend in relation to other currencies. Investors who want to move investment funds to a bank account in Singapore need to understand that Singapore Dollar tends to soar when bad news hits the west.

When the news of the Brexit in which the United Kingdom voted to leave the EU broke, the Singapore dollar found strength against other major global currencies. For instance, the Singapore Dollar made sharp gains against 11 out of 16 major peers – in fact, the Singapore Dollar advanced 14% against the Pound (GBP) after the Brexit vote was cast.

usd sgd

The chart above shows how the Singapore Dollar has traded in relation to United States Dollar in the last one month. The forex gains were strong and impressive and the Monetary Authority of Singapore had to adopt a monetary easing policy. Nonetheless, the Singapore Dollar is still waxing strong and it rose to a one-month high against the dollar in August. On August 1, the Singapore dollar rose to more than a 1-month high of 1.3372 against the USD from an early low of 1.3430. At July 31 close, the Singapore dollar was trading at 1.3387 against the dollar.

Given the strong bullish trends in the Singapore Dollar, foreign investors might want to wait until the currency has a pullback before they move their funds into Singapore. However, you should not forget that Singapore’s economy is healthy and its currency soars when there is bad news in the west; hence, a sustained gloomy outlook in the economy of the west might keep the bullish flames of the Singapore dollar alive.

Nonetheless, foreign investors should note that Singapore’s economy is closely linked to the Chinese economy; hence, economic weakness in China might trigger weakness in Singapore. Smart investors will do well to use economic indicators coming out of the U.S., EU, and China as pointers on the timing for investing in Singapore’s financial or real estate market.

Singapore REIT Stock Shortlisting Bubble Charts August 2016

Bubble chart derived from August 8, 2016 Singapore REITs Fundamental Comparison Table. Compare to previous Singapore REIT Bubble Chart; distribution yield for big and mid cap Singapore REIT have decreased due to increase of the share price. Those small cap Singapore REITs with > 8% distribution yield are SoilbuildBizReit (SV3U), Lippo Malls Trust (D5IU), Cambridge Ind Trust (J91U), Sabana Reit (M1GU), Croesus RTrust (S6NU), Cache Log Trust (K2LU), IREIT Global (UD1U) and Viva Ind Trust (T8B)

These Bubble Charts are used to show the “relative” position compare to other Singapore REITs.

Two visual bubble charts to pick and avoid:

  1. Undervalue Singapore REITs with High Distribution Yield** (Value Pick)
  2. Overvalue Singapore REITs with High Gearing Ratio (Risk Avoidance)

Singapore REIT Bubble Chart (Value) Aug9-2016Singapore REIT Bubble Chart (Risk) Aug9-2016

** Distribution Yield are lagging.

How to use this Singapore REIT Bubble Charts?

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Disclaimer: The analysis is for Author own use and NOT to be used as Buy / Sell recommendation.

Singapore REIT Fundamental Analysis Comparison Table – 8 August 2016

FTSE ST Real Estate Investment Trusts (FTSE ST REIT Index) increases from 745.33 to 756.17 (+1.45%) compare to last post on Singapore REIT Fundamental Comparison Table on July 3, 2016. The index broke out from Rectangle consolidation chart pattern and is currently forming a “Higher High, Higher Low” uptrend chart pattern. 200D SMA also starts to trend upward. This is the bullish sign and technically Singapore REIT sector is in bullish territory. SGX S-REIT (REIT.SI) Index increases from 1141.99 to 1162.02 (+1.05%)

FTSE ST REIT Index Aug7-2016

  • Price/NAV increases from  0.97 to 1.003 (Singapore Overall REIT sector at FAIR value now)
  • Distribution Yield decreases from 7.14% to 6.96% (take note that this is lagging number). More than half of Singapore REITs (19 out of 39) have Distribution Yield > 7%. Current yield is attractive (for certain REITs only) but it is dangerous to make investing decision purely base on the yield. Past performance does NOT equal to future performance.
  • Gearing Ratio decreases from 34.53% to 34.50%.  20 out of 39 have Gearing Ratio more than 35%.
  • Most overvalue is Ascendas iTrust (Price/NAV = 1.585), followed by Parkway Life (Price/NAV = 1.524).
  • Most undervalue (base on NAV) is Sabana REIT (Price/NAV = 0.65), followed by Far East HTrust (Price/NAV = 0.656) and Keppel REIT (Price/NAV = 0.752).
  • Higher Distribution Yield is Sabana REIT (9.52%), followed by VIVA Industrial Trust (9.51%) followed by Soilbuild Biz REIT (9.27%)
  • Highest Gearing Ratio is Croesus Retail Trust (46.2%), iREIT Global(43.1%) and OUE Commercial Trust (40.2%)



Disclaimer: The above table is best used for “screening and shortlisting only”. It is NOT for investing (Buy / Sell) decision. To learn how to use the table and make investing decision, Sign up next REIT Investing Seminar here to learn how to choose a fundamentally strong REIT for long term investing for passive income generation.

  • Singapore Interest Rate increases from 0.23% to 0.37%

Singapore Interest Rate Aug7-2016 SIBOR Aug7-2016

  • 1 month decreases 0.75000% to 0.63458%
  • 3 month decreases from 0.99463% to 0.87630%
  • 6 month decreases from 1.23466% to 1.15072%
  • 12 month decreases from 1.37375% to 1.31250%

Singapore Manufacturing PMI Aug7-2016

The Singapore PMI decreased to 49.3 in July of 2016 from 49.6 in the previous month, as sluggish global demand continued to weigh on the economic performance. The reading pointed to the thirteenth consecutive month of contraction, as new orders fell further to 49.0 (from 49.2 in June), new exports orders declined to 48.8 (from 48.9 in June) and output went down to 49.3 (from 49.4 in June). Manufacturing PMI in Singapore averaged 50.13 from 2012 until 2015, reaching an all time high of 51.90 in October of 2014 and a record low of 48.30 in October of 2012. Manufacturing PMI in Singapore is reported by the Singapore Institute of Purchasing & Materials Management, SIPMM.


Fundamentally Singapore REITs in general, the valuation is at Fair Value but distribution yields are still attractive. Technically Singapore REITs sector is in bullish territory and on uptrend. US Fed may delay the interest rate hike as there are a lot of uncertainties due to Brexit.  This may probably be the reason why Singapore REIT is coming back to life again!  Come and Learn How to Find Good Value Singapore REIT steps by steps to Invest at Singapore REITs Investing class.


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