Singapore ETFs Have Appeal

As Asia continues to draw investor attention and witness stellar economic growth, Singapore and the exchange traded funds (ETFs) that track the nation remain attractive and for good reason.

In the first half of 2010, Singapore has seen stellar growth.  According to government data released on Wednesday, Singapore’s economy grew by 18.1% compared to the same period as last year, primarily buoyed by increased tourism and strong exports.  As for the remainder of 2010, Singapore’s economy is expected to continue its growth and will likely post overall growth of 13%-15% for the entire year. 

Singapore is expected to reap the benefits of the growth expected by other Asian nations and industrial countries.  In particularly, Singapore is expected to benefit from the V-Shaped economic recovery that is being seen in Asia.  Of all its exports, nearly 80% are traded within Asia, primarily to China, Malaysia, Indonesia and Japan, nations which continue to demand more goods from Singapore.  In fact, in June exports to China and Japan jumped 39% and 75%, respectively, from the previous month.

To further add to Singapore’s appeal, private consumption is expected to increase as a result of improved employment, rising incomes and the income effect of higher equity and property prices.  Additionally, business confidence in the Asian nation is on the rise which is expected to give business investment a boost.  In particularly, financial and business services are expected to see growth and construction investment should be supported by government funded infrastructure projects.

Lastly, Singapore has tamed its inflationary worries by revaluing its currency.  After allowing the Singapore Dollar to appreciate and be revalued, inflation is anticipated to be between 2.5 to 3.5 percent for 2010 and should not be of much concern. 

In a nutshell, Singapore remains appealing and will likely flourish in the coming months.  Some ways to gain access to the Asian nation include:

  • iShares MSCI Singapore Index (EWS)
  • iShares FTSE EPRA/NAREIT Dev Asia Idx (IFAS), which allocates 12.6% of its assets to Singapore
  • WisdomTree Pacific ex-Japan Total Div (DND), which allocates 11.4% of its assets to Singapore
  • iShares S&P Asia 50 Index (AIA), which allocates 10.3% of its assets to Singapore.

Although an opportunity seems to exist in Singapore, it is equally important to consider the inherent risks that are involved with investing in these equities.  To help protect against these risks, the use of an exit strategy which identifies specific price points at which downward price pressure is likely to occur is important.  Such a strategy can be found at

Disclosure: No Positions

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