Nomura International, a Japanese investment bank, today sees Singapore stocks gaining from the opening of a new international airport. The opening of the Changi International Airport marks the coming of age of Singapore as a forward-looking economy. The country has been able to reduce costs and increase productivity, at a time when many other nations in East Asia have watched their economies contract or stagnate. The growth potential in Singapore is enormous, and Nomura foresees that the country’s economy will continue to move up for years to come.
Today’s economy in Singapore is highly diversified, with manufacturing thriving on all fronts. Not only does the country manufacture cars, electronics, and clothes, but it also exports its goods all over the world. Singaporean exporters are very successful because they can reach their target markets by flying to the most ideal place – an airport. They know that the stock market in their home country has been so far away that they can make better profits selling their products locally.
This is not just idle speculation on Nomura’s part. Singapore’s economy is booming and the prime rate of interest is low. Companies in Singapore have been able to expand and keep operations going, despite higher costs than those in their home markets. Because the country’s economy is so stable, its stock market has also done well. Singaporean companies such as Primark, Xerox, and Unwired lab have seen their shares appreciate by leaps and bounds, on par with those in their home markets. The same thing holds true for the company that makes Nomura Limited ticker tape, although its shares appreciate more modestly.
Singapore’s growth engine is being powered by tourism. The country hosts the world’s busiest port in the world, and the influx of tourists has helped lift the economy. In response to this boost in tourism, the government has opened up its tourism market by making the country a less restrictive destination for non-native investors. Nomura sees Singapore rising in popularity, and its shares in the stock market are expected to rise even further. Singapore is an attractive option for those wanting to get in on the ground floor of a successful business venture in Asia.
However, just because Nomura sees Singapore rising in the stock market doesn’t mean that other companies in the region will follow suit. Investors who want to invest elsewhere need to be careful. The Asian Financial Crisis of 1997 led to the collapse of many of the country’s trading partners and left it with a largely negative outlook for the future. Now that the economy has bounced back, many of these nations are once again becoming strong competitors in the international market, and investors need to think about whether they should buy up shares of stock from any of these companies.
Singapore itself has many large international banks, including the ones mentioned above. These financial institutions aren’t likely to pull out all of their investment from the country’s stock markets, as they would lose out on the vast profit that they make through the sale of their Singaporean securities. They’ll continue to lend and invest in other countries, as they have done for the past thirty years. That being said, however, there could be a movement toward Singaporean stocks within these banking industries, and the government is eager to take advantage of this growth.
A third possible route for the country’s stock market would be to look towards the government-sponsored priory, the Singapore Exchange. The government-sponsored institution trades in foreign securities and has been studying ways to improve its stock market performance and attract more global investors. If it can successfully do this, then more countries may be able to see the light at the end of the tunnel and invest in Singaporean stocks themselves.
No matter what direction the stock market takes, Nomura sees Singapore rising in the future. Over the past decade, its economy has seen phenomenal growth. It hasn’t hurt that the nation has kept taxes low and has kept regulation of businesses and labor minimal. Its reputation for stability and low crime rate make it a great place to do business and to live. As the country continues to mature and embrace the global economy, there’s no telling where it will take its place in the world, but for now, Nomura sees Singapore stocks moving in the right direction.
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