logo
Singapore not revising GDP outlook even if US-China talks are ‘encouraging': DPM Gan

Singapore not revising GDP outlook even if US-China talks are ‘encouraging': DPM Gan

Business Times16-05-2025

[SINGAPORE] Despite the US tariff pause and ongoing talks on pharmaceutical rates, Singapore is not further revising its growth projection for now, amid heightened global uncertainty, Deputy Prime Minister Gan Kim Yong said on Friday (May 16).
'The fact that the US and China are at the discussion table is encouraging, but it's too early to tell what the outcome will be, and the uncertainty remains,' he said at a doorstop at the Singapore Economic Resilience Taskforce (Sert), which he chairs.
So while the talks are encouraging, Singapore must 'exercise caution', he added. Singapore downgraded its full-year growth outlook to 0 to 2 per cent last month, from an earlier projection of 1 to 3 per cent.
The task force was set up shortly after US President Donald Trump unleashed his 'Liberation Day' tariffs on Apr 2, with a 10 per cent baseline duty and higher reciprocal tariffs for some countries. A week later, a 90-day pause was introduced for the latter.
DPM Gan, who is also trade and industry minister, noted that tariff uncertainty is causing businesses to hold back on investment and hiring decisions.
'The slowdown in investment will also result in the slowdown of the global economy and domestic economy,' he said.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
US tariffs on China imports were cranked up to 145 per cent at their peak, then slashed to 30 per cent for a 90-day period, following a May 14 meeting between Trump and Chinese President Xi Jinping in Geneva.
DPM Gan noted that some companies may be front-loading exports during this 90-day window, leading to a short-term boost. Singapore's non-oil domestic exports surged 12.4 per cent in April, Enterprise Singapore data showed on Friday.
Yet this is 'really no consolation', said DPM Gan, as it merely represents 'advance sales', and exports and production will eventually slow down.
Negotiations with the US
DPM Gan also gave an update on Singapore's negotiations with the US, which are centred on sectoral tariffs – chiefly for pharmaceutical exports, though the US has also indicated plans for semiconductor tariffs.
The US has offered to discuss 'some form of concession for Singapore to have an official preferential tariff, even to the extent of zero tariff, for pharmaceutical exports to the US', he said.
In exchange, Singapore may have to ensure 'a smoother flow of goods' and the 'security of supply chains', he added. He did not give details, citing the confidential nature of the discussions.
This is a 'significant opportunity' as pharmaceuticals remain a key part of Singapore's exports to the US – but the negotiations are likely to be a 'fairly long journey' due to the high level of details involved, he warned.
There are also discussions on semiconductors, but 'the details are not available yet', he added.
'They are happy to discuss with Singapore how we can ensure continued supply, and the reverse is also important – that they are also keen to see how they continue to supply Singapore with semiconductor technology so that we will support our digital economy or semiconductor industries.'
Support measures for businesses
DPM Gan gave an overview of Sert's three key areas of work: information, engaging businesses and longer-term strategy.
The task force has been speaking to both multinational corporations and smaller companies to prepare them for the tariff impact and learn how to better support them.
DPM Gan said the task force has started working on potential support measures that can be rolled out 'when the situation warrants it'.
These include enhancements to schemes in Budget 2025, such as the Market Readiness Assistance Grant for going overseas; financing schemes with local banks; and job creation efforts.
Asked what the tipping point for such a roll-out would be, the minister said there is no specific index being watched, but the task force is monitoring 'the overall development of the global situation, as well as the domestic and economic situation'.
There may be both broad-based measures to help the economy as a whole, and 'very targeted measures' for affected sectors, he added.
For example, some companies that export directly to the US could see orders slowing down, and may thus need more capital since payments may be dragged out.
New task force members?
With a Cabinet reshuffle imminent after the May 3 general election, DPM Gan did not rule out the possibility that the line-up of the task force could change.
'We may need to make some adjustments to the membership, because the membership is taken from ministers with a specific portfolio,' he said.
Besides DPM Gan, the task force comprises four other ministers and three tripartite representatives – one each from the Singapore Business Federation, the National Trades Union Congress and the Singapore National Employers Federation.

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Tencent Music to buy Chinese audio platform Ximalaya for US$2.4 billion
Tencent Music to buy Chinese audio platform Ximalaya for US$2.4 billion

Business Times

time29 minutes ago

  • Business Times

Tencent Music to buy Chinese audio platform Ximalaya for US$2.4 billion

[BEIJING] Chinese music platform Tencent Music Entertainment Group said on Tuesday (Jun 10) it would buy long-form audio platform Ximalaya for about US$2.4 billion in cash and stock, expanding its library of content to attract more paying users. US-listed shares of Tencent rose 7 per cent in premarket trading. The company will offer US$1.26 billion in cash and Class A shares representing up to 5.20 per cent of its total outstanding stock. It will also issue shares to Ximalaya's founder investors not exceeding 0.37 per cent of its total share count. The stock component of the deal totals about US$1.15 billion based on Tencent Music's last closing price on April 24. Closely held Ximalaya counts Tencent, Baidu and Sony Group's music entertainment unit as backers. The company filed for a Hong Kong initial public offering in 2021, but pushed back the plan. The app-based online audio platform had 303 million monthly active users as of 2023, according to a separate listing application it filed last year. Tencent Music is one of the biggest online music entertainment platforms in China, with apps such as QQ Music, Kugou, Kuwo and WeSing, according to its website. REUTERS, BLOOMBERG

Private-capital funds: Depressed distributions with no end in sight
Private-capital funds: Depressed distributions with no end in sight

Business Times

timean hour ago

  • Business Times

Private-capital funds: Depressed distributions with no end in sight

AFTER a bacchanal of deal activity lasting into 2021, private-market participants are still nursing a hangover. Assets acquired at premium valuations at the market peak have been creating headaches for general partners (GPs), who must decide whether to hold out for buyers at current valuations or stomach write-downs for a shot at quick liquidity. Net asset value (NAV) is increasingly bottled up in old funds that should otherwise be liquidating. For now, it seems only top-shelf assets are finding buyers, while assets with weaker fundamentals are still on ice. In this column, we take a sober look at how private-capital markets are adjusting to a world of depressed distributions, with no exits in sight. Limited partners (LPs), hoping for an outpouring of liquidity in 2025, may instead want to brace themselves for another dry year. Recent vintages falling further behind Private-capital distributions remain subdued, extending a slowdown that began in the wake of 2021's exit boom. What once looked like a brief pause increasingly feels like a prolonged holding pattern and a test of patience for LPs. This slowdown is especially apparent in the divergence of the net-cash-flow paths between vintage cohorts. While cash flows for most historical vintages follow remarkably similar paths, recent vintages are drifting from the script. The traditional cadence of investment, ramp-up and harvest appears to be slipping out of rhythm. In some cases, as with the 2015-2017 vintages, this slowdown looks like mean reversion, dragging these vintages back down after a period of unusually strong liquidity – particularly in venture capital and buyout. In others, like the 2018-2020 vintages, the drop appears more acute, suggesting not just a return to historical norms but also a deeper pullback in realisations. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Structural shifts may be reinforcing the deviations from long-run averages. Strategy evolution in areas such as private credit, shifting exit dynamics in buyouts, and a valuation overhang in venture and real estate all suggest that today's market environment is markedly different from past cycles. Historical analogues are becoming less-reliable guides. But the message is clear: Recent vintages aren't just behind the curve – they're navigating a new course. Water everywhere, but not a drop to drink Across private-capital strategies, NAVs in old funds (those that have outlived the average liquidation age of their asset class) are at or near record levels, reaching US$250 billion in the fourth quarter of 2024, according to data from the MSCI Private Capital Universe. For LPs anticipating liquidity from their more mature private-equity (PE) commitments, some unwelcome news: This rise in late-life NAV is largely attributable to distribution rates, which have fallen to record lows, rather than to strong growth. PE distribution rates remain depressed, with specific implications for funds that are over the hill. The dearth of distributions is bottling up assets that were once reliable candidates for exits. This has meant fund lives that drag on longer than expected, and LPs are increasingly looking to more mature corners of their portfolios for liquidity. The same can't be said for private credit and private real estate. In the former, the self-liquidating nature of loans has stabilised distributions and kept NAVs in check through funds' golden years. For the latter, write-downs kept a lid on valuations coming out of 2020, even as transaction activity remained depressed. For PE distribution rates to revert to historical norms and old NAVs to run off, there are two options: one hopeful, one not. In the optimistic scenario, deal activity recovers and a wave of exits provides some much-needed liquidity. In the other, GPs come to believe that many of these long-held assets are overvalued and accept write-downs as the cost of winding down a fund, as we've seen in real estate. Tempering cash-flow expectations Across PE and private real estate, distribution rates are near historic lows, and recent market volatility may put cash flows under further pressure when we start to see data for 2025. Historically, prolonged downturns in public-equity markets have been reflected in private-capital distributions. The dotcom bust and 2008 global financial crisis both hit distributions hard; but in recent years, distributions have remained depressed despite a rebound in public equities. For LPs counting on distributions to fund capital calls from other private commitments, this combination of public-equity sell-offs and falling distribution rates presents a challenge: if forced to sell liquid assets to meet capital calls, it's likely to be when prices are down. Private credit, in contrast, has continued to distribute more or less apace, benefiting from elevated interest rates passing through to lenders. This cash-flow diversification may become an increasingly important benefit of private-credit allocations. Not everything is rosy in private credit, however. GPs are increasingly writing down loan values as borrowers struggle under the weight of persistently high interest rates and new-found uncertainty around the economy's trajectory. Valuation multiples in free fall may call for an Ebitda parachute Between 2022 and 2024, buyout exits were sold at lower median-valuation multiples than assets still held in portfolios – an inversion from historical norms – despite exhibiting stronger margin growth and lower leverage. In contrast, held assets, carried at higher multiples, are grappling with contracting profitability and rising leverage, raising questions about valuations and their paths to exit. These questions are amplified by the macro backdrop: sticky inflation risk, higher-for-longer interest rates and growth uncertainty that could tip into stagflation. Held assets confront these macro headwinds with little balance-sheet cushion, given their narrowing-since-entry margins and rising leverage. Over the past decade, exited assets have consistently exhibited stronger median Ebitda (earnings before interest, tax, depreciation, and amortisation) margin growth since their entry and more contained median net-debt-to-Ebitda ratios than held assets, which reflect GPs' tendency to prioritise exiting higher-performing assets. This selection trend proved especially relevant between 2022 and 2024, as exited assets' robust fundamentals cushioned the impact of falling valuations. In 2025, with multiples under pressure and rising macro uncertainty, strong fundamentals may be the last line of defence against deeper erosion in exit proceeds and more strain on LPs. Is the party over? Recent vintages of private-capital funds have plenty of ground to cover if they're going to catch up with their older peers' cash-flow patterns, and the surprising volatility in public markets of early 2025 is unlikely to help them close the gap. Returns for older private-equity funds have been flat, but more assets are accumulating in funds that are struggling to liquidate their holdings. GPs are preferentially exiting portfolio companies with strong fundamentals, leaving an unclear path for selling those remaining assets. LPs who were hoping for a rebound in transaction activity, and thus liquidity, in 2025 may need to adjust their plans. The writers are vice-presidents, MSCI Private Capital Research. Written with the assistance of Uday Karri, vice-president, and Daniel Hadley, senior associate.

Don't fall for the trap of the Taco trade
Don't fall for the trap of the Taco trade

Business Times

timean hour ago

  • Business Times

Don't fall for the trap of the Taco trade

[SINGAPORE] At first, it was ominous. Then, it became obvious. There's a new trade in town called the Taco trade, or Trump Always Chickens Out. Here's how it works: When US President Donald Trump announced his Liberation Day tariffs on Apr 2, the S&P 500 index tanked by more than 10 per cent in days. His tariff threat lasted less than a week before he backed down, pausing the implementation of higher tariffs for 90 days. In response, the index jumped by 9.5 per cent in a single day. And just like that, the Taco trade was born. Despite the initial pause, underlying trade tensions re-emerged when the US raised tariffs on China and engaged in a tit-for-tat tariff battle, raising US import levies to as high as 145 per cent at its peak. Amid the war of words between the superpowers, the stock market was unsettled. Then on May 12, the US and China called a truce for 90 days with the US reducing tariffs to 30 per cent for Chinese imports, and China lowering its import levy to 10 per cent for American goods. Once again, the S&P 500 index rallied on the news; last Friday (Jun 6), it closed at just a stone's throw from its all-time high. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up By then, traders had started taking notice of the emerging pattern. Financial Times columnist Robert Armstrong coined the term Taco trade, an acronym that quickly spread all over Wall Street. Second guessing the Taco trade If you have noticed the Taco trade pattern, you're not alone – and that's a big problem. The truth is if everyone is thinking the same way, then no one has an edge over anyone else. Furthermore, if every trader anticipates a market recovery after Trump backs down, then the competition turns into one in which the fastest fingers to enter a trade wins. That's a race, not a strategy. Trying to second guess when the stock market will change course is no different from timing the market. Here's the rub: According to Hartford Funds, if you missed the 10 best days (read: gains) in the stock market over the past 30 years, your returns would be less than half the amount from staying fully invested over the same period. In other words, mistiming your entry and exit will have a severe impact on your investment returns if you miss even a tiny number of days. Like walking on a tightrope, a minor misstep could have major consequences. So, don't try your luck. History has not been kind to trendy trades History hasn't been favourable to formula-based investment strategies – for good reason. Take the Dogs of the Dow (DD), a methodology popularised in 1991. The DD formula suggested that investors can maximise their investment yield by buying the top 10 highest-paying dividend stocks from the Dow Jones Industrial Average (DJIA) at the start of every year. But alas, it was not to be. Research from the NYU Stern School of Business showed that when an investment strategy becomes popular, the masses try to front-run the strategy, pre-emptively piling into the shares and driving up their stock prices. With a higher starting price at the beginning of the year, the DD group will inevitably find it hard to outperform the market. Therein lies the paradox: Even a proven formulaic strategy will fail if the masses pile into the stocks. Ironically, the simplicity that helps popularise the strategy eventually leads to its demise. But if that's the case, where does this leave investors? It's the business, not the acronym If acronym-laden trades don't work, then why have the original FAANG stocks been profitable to shareholders over the past decade? While Taco and FAANG are acronyms, the similarity stops there. The Taco trade is subject to the whims of Trump, which can change at any moment. FAANG stocks, however, are made up of growing US tech businesses. Coined in 2013, the original acronym FANG consisted of Facebook (now Meta Platforms), Amazon, Netflix and Google (now Alphabet). Apple was added in 2017. Here's the difference for FAANG: Over the past decade, the average return from FAANG stocks was over 900 per cent or 10x in returns. Tellingly, these gains are largely backed by growth in the quintet's free cash flow (FCF) per share. The best example is Alphabet. Over the past decade, its shares grew by 640 per cent. In terms of FCF per share, the gain was 643 per cent, which closely matches its stock price increase. The main reason the FAANG group's share prices have risen over this period lies in the solid gains in their free cash flow. Unlike the Taco trade, FAANG's gains were not dependent on the whims of a US president. The long-term difference Here's the twist: Buying a group of stocks such as FAANG does not guarantee great returns. The key to turning a great stock into great returns is time. Simply put, the average 10x return the FAANG stocks delivered was only possible when there was enough time for the businesses to demonstrate their ability to grow. For investors, patience is paramount. Sadly, many investors invariably lose their nerve along the way and sell too soon. The truth is, holding a stock for a decade is not as easy as it looks. Wealth manager Ben Carlson provided two telling statistics. First, the good news: if you look at the rolling 10-year periods since 1950, the S&P 500 index has delivered positive returns 93 per cent of the time. That is, you have a high chance of getting good returns if you hold for a decade. That's the reward for patient investors. Then, there's the unfortunate news. The probability of a bear market (an index decline of 20 per cent or more) during these same 10-year periods is 95 per cent. When you put the two together, the message is clear: Volatility is the price of admission. It's the toll booth you have to pass to get the returns you want. Get smart: It's a marathon, not a sprint There's no doubt that the allure of making a quick buck is strong. That's why trends such as the Taco trade are popular. Clever branding plays a role. But the reason the FAANG strategy has worked has not been because the five company names lined up to form a catchy acronym. The real insight was about giving great businesses enough time to run. For investors, the real trick is about cultivating the iron gut of a long-distance runner, not just picking the right stocks. As the numbers from Ben Carlson clearly show, the real game-changer isn't about timing your entry or exit, but in not exiting too soon. Because when the market inevitably tests your resolve, that unwavering patience, not some trendy trade, will be the real differentiator between success and failure to get what you want. So, choose great businesses over stock prices, endurance over speed, and above all, patience over quick trades. In the long run, the road less travelled is the most rewarding, in my eyes. The writer is co-founder of The Smart Investor, a website that aims to help people to invest smartly by providing investor education, stock commentary and market coverage

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store