The Subdued Mood in Singapore’s Financial Industry

The Subdued Mood in Singapore’s Financial Industry

The fact that Singapore is located at the heart of the intra-Asian trade has allowed it to prosper economically. This has attracted investors from all over the world. Some countries are even willing to copy the island state’s open, low-tax model, as they believe it has greatly contributed to Singapore’s success. Great Britain, for instance, is aiming to be the “European Singapore” the moment it finalizes its withdrawal from the European Union. Despite the fact that Singapore has had this much success, the mood there at the moment is less buoyant than you can imagine. Singapore has been conducting its business, steering in a middle course between USA and China. This is alarming President Donald Trump, and as of late, there have been some public spats with China.

 

The slowdown in global trade is having some effects on the financial industry

Currently, global trade is not being conducted at the same pace as it recently used to. While there are some indications that the global trade will be back to where it was, the slowdown has had a massive impact in a country that contains the world’s second busiest port. For a long time, Singapore has had numerous business opportunities. Investors who believe that it can be a profitable venture to establish company in singapore have been finding it difficult. The country’s well developed infrastructure and the low tax models makes it a conducive environment to start your business. However, with global trade experiencing a downward spiral, Singapore recorded an annual GDP of 1.8%, the lowest since 2009. While the country has a very stable economy, the government is now allowing in less foreign workers, as it bows to pressure from voters.

 

The country still has great potential as a regional financial center

Singapore boasts of strong legal and regulatory systems. The country has also been politically stable in addition to its excellent infrastructure. This gives it an edge over other countries, which is an indicator that it can be the region’s financial center. Some people even call the country an Asian Switzerland. Lately, it has been attracting Indian offshore wealth, which can hopefully transform the country into a hub for the budding market in masala bonds (these are bonds in rupee denominations usually issued outside India).

 

Well capitalized banks

Singapore has been given a rare rating of AAA by the International Monetary Fund (IMF). The IMF actually describes the banks in Singapore as well capitalized, and claims that they have adequate provisions for any loans that can be considered bad, though there are some worries as to its exposure to oil and gas companies. At the moment, Singapore holds the third position in the world when it comes to the biggest trading centers for foreign exchange, after it overtook Tokyo in 2013. Its derivatives in the market are also growing with over-the-counter transactions being in excess of $400bn per day. The finance industry contributes a massive 13% to the country’s GDP.

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