The small island city-state is smack in the middle (both geographically and economically) of what is shaping up to be the global economic engine -Asia. In 1819 Sir Thomas Stamford Raffles saw the potential of Singapore’s geographic location. Raffles was spot on. Today the ultra-modern, ultra-clean city-state is home to one of if not the world’s busiest port. Singapore’s economy is export driven but also has a diversified manufacturing base in electronics, petroleum refining, and mechanical engineering.
Cosmopolitan
What is the draw to Singapore? Besides being the home to the Singapore Sling (developed by a bar tender Ngiam Tong Boon at the Raffles hotel in 1910) Singapore is a politically stable, english speaking country with banking secrecy. Kevin Brown of the Financial Times reported recently of the surge of Russian wealth entering Singapore listing all of the above reasons as why oil money rich Russians are coming down in droves.
Hot
Only 85 miles from the equator Singapore is hot. The economic growth in the Asian region is also supplying its own heat. GDP in Singapore grew by a seasonally adjusted, annualized 15% for the third quarter of ’09 which followed an increase in the third quarter of 22%. Consider who the city-state calls neighbors, Australia, China, South Korea, Indonesia, Hong Kong and Taiwan. All of these countries have economies that experienced milder recession than their western counterparts and are now taking advantage of that brilliant place.
Many Pacific/Asian companies are scooping up fantastic opportunities as a result of western companies having to sell entire divisions in the region as a result of the economic crisis. This should bring a flood of business to the many banks and financial institutions that call Singapore home. These opportunities are just what Singapore’s sovereign wealth fund (estimated to be the third largest in the world) can capitalize on.
ETF Play
So how do you play Singapore through ETFs? Singapore shows up in a few Pacific ex-Japan ETFs but for meaningful exposure go direct. You can go direct with the iShares Singapore Index (ticker EWS). Almost 45% of the fund is in financials with about 21% in industrials. YTD the fund is up 51.87% and is above both its 50 and 200 day EMA.
iShares Pacific ex-japan ETF (ticker EPP) has about 10% of the portfolio in Singapore. This fund is a play on the region and gives exposure to Australia, Singapore, Hong Kong and New Zealand. The fund is up 55.32% and is above both its 50 and 200 day moving average.
Charts courtesy of StockCharts.com
Disclosure Statement: ETFGPS is a blog that Navigates The World of ETFs. Sustainable Investment Strategies LLC is a Registered Investment Adviser in the State of Maryland, and does hold positions in the EPP ETF at the time of writing. Investors who are interested in money management services may visit the Sustainable Investment Strategies LLC web site.
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