As global financial markets rewire, Singapore investors look to home

Business Times

a day ago

[SINGAPORE] Events this year make it clear that we are living in an unpredictable and complex world. For years, investors have operated under the assumption that the US would lead growth in developed markets, that policy changes were incremental, and economic disruptions were cyclical.
However, a global transformation is underway and investors are considering the implications of various outcomes for the broader macro environment – including trade tariffs and the potential end of US exceptionalism, and how these factors will impact their investments.
For investors in Singapore looking to rebalance their portfolios, the local market looks to be a safe haven. This is according to Fidelity International's Asia Pacific Investor Study 2025, which aims to provide a pulse check of investor behaviour in the region. The survey revealed that among Singapore investors holding US equities, 23 per cent have decreased their allocation since the start of the year and 46 per cent have held it at the same level.
What is perhaps more interesting is that among those who have reduced their US equity exposure, 46 per cent have re-allocated assets back to the Singapore market. This was followed by the China (20 per cent) and global (10 per cent) markets. This is perhaps unsurprising given the efforts from the Monetary Authority of Singapore to boost the local market, including S$5 billion set aside under the Equity Market Development Programme.
Equally intriguing was the fact that investors here maintained a risk-on sentiment. Almost half of equity investors indicated they would increase their allocation in the next 12 months, and just 13 per cent planned to decrease it.
The many uncertainties in the world can present opportunities if investors know where to look. In these volatile times, the case for diversifying portfolios is more compelling than ever.
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Identifying opportunities
Investors should not overlook developments in the macro environment as they are crucial in evaluating opportunities across various sectors, companies and regions. While there is no crystal ball to offer a definitive answer, it is important to consider key factors such as GDP growth expectations, the trajectory of inflation, and the potential outcomes of different scenarios.
In times of market uncertainty, such as we are experiencing today, it is important to continuously recalibrate for various potential scenarios. This involves having a clear grasp of the current key drivers and how they differ from a year ago, alongside delineating what a bull market case would entail compared to a bear market case.
By attempting to identify options that are resilient across different scenarios – be it new tariffs, fluctuations in oil prices, or changes in macroeconomics and interest rates – you are ultimately seeking the most favourable risk opportunities.
End of US exceptionalism
Many investors are evaluating whether the era of US exceptionalism is drawing to a close and considering the implications for current and future investment strategies. Over the past 15 years, the US has emerged as an economic and financial leader.
This trend has been driven in part by the rise of hyperscale companies which are now dominant constituents of the S&P 500 index. The robust earnings growth delivered by such companies has contributed significantly to market performance overall. However, a key consideration is whether these mega-cap companies can maintain their momentum and continue to generate sustainable growth.
On a multi-year outlook, the companies are well protected from a moat perspective, and they have solid market share. However, investors should also consider whether they will continue to have an edge in innovation and the capital to re-invest down the track. The assumption that their historical returns and growth would continue to outstrip the rest of the world is starting to become a little bit more tenuous.
Expectations for US GDP growth are being downgraded, while treasury markets are jittery as high fiscal deficits look likely to continue.
Investors should reflect on developments in the rest of the world and assess whether the expectations for other markets are improving or declining. Europe looks promising, buoyed by fiscal and monetary policy stimulus across numerous European nations. Valuations are reasonable, and companies are demonstrating strong cash flows – all of which signal a positive investment environment.
Similarly, in emerging markets, there is a notable combination of attractive valuations and, in some cases, advantages arising from a weaker US dollar. Additionally, certain markets, such as China, are demonstrating promising innovation cycles.
The broad revitalisation observed in 2025 – exemplified by upstarts such as DeepSeek, which rolled out potentially market-leading products – highlights significant opportunities for investors. These developments warrant increased optimism and consideration for investment.
Risk and diversification
Uncertainty can be daunting, but it also presents opportunities for investment and global diversification. Maintaining an exposure to the US remains important due to the strength and reputation of its companies. However, ongoing questions regarding the US economy and the sustainability of mega-cap leadership suggest that investors should also consider diversifying into other regions worldwide. It is positive that many investors here already plan to do so.
As we navigate ongoing market volatility, investors should seize the opportunity to identify and invest in companies with resilient cash flows, robust balance sheets and potential for re-investment.
The writer is head of South-east Asia and country head of Singapore, Fidelity International