SINGAPORE (Nov 19): As the US Federal Reserve continued on its tightening path, rising borrowing costs and currency fluctuations have had a wide-reaching effect on Asia-Pacific markets. Against this backdrop, Singapore’s third-quarter corporate earnings failed to deliver positive surprises and, as a result, the benchmark Straits Times Index fell to an almost two-year low of 2,961 in end-October. A moderate decline in growth forecast amid escalating trade frictions further dampened the macroeconomic outlook in the region, especially with China facing slowing growth as the country tries to tackle its debt burden via deleveraging reforms.

On the positive side, most blue chip companies have yet to observe a material impact from the escalating of trade tariffs, although top executives remain cautious against any trade headwind in the coming months. Rising interest rates are a positive catalyst for banks’ margins, while the highly leveraged property and real estate sector is exposed to rising borrowing costs in the years to come, although the impact is gradual and limited in the short term. Currency volatility has generally negatively impacted companies with a large exposure to foreign markets, with Singapore Telecommunications (Singtel), Jardine Cycle and Carriage (Jardine C&C), ComfortDelGro and several agriculture companies affected the most.

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