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Decline in interest rates not necessarily beneficial for Singapore's stock market

Bloomberg
Bloomberg6/3/2020 11:51 AM GMT+08  • 3 min read
Decline in interest rates not necessarily beneficial for Singapore's stock market
While a decline in interest rates is generally seen as good for stocks, the benefits of Singapore’s slide toward negative territory are far from certain.
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(June 3): While a decline in interest rates is generally seen as good for stocks, the benefits of Singapore’s slide toward negative territory are far from certain.

The city-state’s overnight borrowing rate slid to within two basis points of zero last month while the one-month swap-offer rate turned negative for the first time in almost nine years. The relative appeal of the nation’s $370 billion stock market boosted by the sub-zero rates is overshadowed by the negative implications for the economy and financial system.

Singapore’s gross domestic product is expected to shrink 4%-7% this year, its worst contraction since independence in 1965, as the pandemic pummels the trade-reliant economy. The plunge in money-market rates came as the Monetary Authority of Singapore promised to provide sufficient financial liquidity, while the government has deployed stimulus of $92.9 billion so far.

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