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The Singaporean economy is one of the most highly developed free market economies in the world. Singapore has largely encouraged international investment, which has been a contributing factor to its success, and as such, has been ranked as one of the most open, least corrupt, and easiest markets to do business in. Singapore’s economy is ranked 37th strongest in the world by nominal gross domestic product and 39th by purchasing power parity. While the ease of doing business has provided much significance to this market’s success by making the investment climate more attractive, the stability of the political atmosphere, especially in an area of the world known to be historically unstable, also deserves credit for making this major Asian market much stronger than most of its neighboring competition.
Singapore’s export, especially those linked to advanced technology such as electronics, have played an important role in the economy’s success. The country’s gross domestic product is also highly compiled of industry and services. What the Asian economic power lacks in natural resources it more than adequately makes up for in processing the raw materials of its neighbors. It seems that Singapore has thought their way to strength rather than taken it by force. This is widely evident as Singapore not only lacks natural resources but also land and potable water, which means these resources must be purchased, preserved and is highly regulated. This article will cover the financial system of Singapore, as well as a range of market information covering currency, futures, and stocks.
show moreThe Stock Exchange of Singapore (SES) is the predecessor to today’s Singaporean stock exchange. The split between Malaysia and Singapore caused a resulting fissure in the exchange which became two different entities known as the Singapore Exchange Limited and the Kuala Lumpur Exchange. Singapore’s stock market which is now the Singapore Exchange Limited is an investment holding company headquartered Singapore that provides a complete array of financial services relating to securities and derivatives trading. The exchange, abbreviated as SGX, is a member of the Asian and Oceanian Stock Exchanges Federation as well as the World Federation of Exchanges. The company also owns a minority stake in many other markets around the world including Bombay, Tokyo, and Philippine stock exchanges.
Like its economy, the Singapore dollar (SGD) is one of the most stable in the south east Asian region. The currency is somewhat correlated with the Chinese yuan as the two countries share an important trading alliance. The Monetary Authority of Singapore (MAS) has some influence on the native supply and regulation, but as a whole, the Singaporean dollar (SGD) is significantly less regulated than the currency of China. Post global economic crisis, the Singaporean dollar became one of the most consistently performing currencies in the world. As this became clear to the international financial community, the Singaporean dollar became the 12th most popular currency on the financial exchange market, and the 3rd most popular in Asia after the Japanese yen (JPY) and the Chinese yuan (CNY). The SGD accounts for almost 2% of the daily volume traded in the market.
Over the past century, Singapore has been home to several different currencies ranging from the Straits dollar to the Malaysian ringgit. Interestingly, the Brunei dollar which has not served as the country’s official currency, is commonly accepted throughout the country. Singapore’s current dollar was issued in the mid 1960’s after the breakdown of the shared monetary union between Malaysia, Brunei, and Singapore being a former territory of Malaysia. The relationship also included a partnership with the Malaysian ringgit, but this formally ended in 1973.
The Singaporean dollar’s value was originally pegged to the value of the Great British Pound (GBP), but during the early 1970’s, the dollar pegged its value to the United States dollar (USD) for a brief period of time. After this period, the Singaporean dollar was pegged to a basket of foreign currencies whose nature was undisclosed to the public. However, like many currencies, the Singapore dollar is allowed to float freely on the market within an undisclosed range. This value is still monitored by the Monetary Authority of Singapore (MAS).
The Singaporean Exchange limited lists a total of almost 800 companies with a blend of approximately 500 domestic companies, 100 Chinese companies and almost 200 other foreign listings. The strongest and most stable of these companies can be found on the Straits Times Index (STI). At one point, this exchange was named the Straits Times Industrial Index, but after some reclassification, the “industrials” component was removed.
Companies that deal with financial services and the technologically-advanced exports of the region represent the backbone of the Singaporean economy and are therefore some of the most profitable and at the same time, the most stable investment opportunities in the region. It is also worth noting that Singapore makes it very easy for foreign investors to get involved in the market, not dissimilar to the same regulations that make international businesses feel so welcome to list on Singapore’s internationally-acclaimed stock exchange.
