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Do they know it's Christmas? A reflection of 2022 and a call to start 2023

Chew Sutat
Chew Sutat12/16/2022 02:09 PM GMT+08  • 10 min read
Do they know it's Christmas? A reflection of 2022 and a call to start 2023
Sharity, the mascot of the Community Chest, was brought along by Chew when he climbed Mount Kilimanjaro in August / Photo courtesy of Chew Sutat
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It’s Christmas time

There’s no need to be afraid

At Christmas time

We let in light and we banish shade

The iconic song Do they know it’s Christmas? did not merely raise awareness of the 1983–1985 famine in Ethiopia. The song, written in 1984 by Bob Geldolf and Midge Ure was created at the height of the Cold War when “glasnost” would soon enter the global lexicon as the Berlin Wall fell a few years later. Meanwhile, in that pre-Internet era, music was an effective unifier across borders and the Iron Curtain to focus attention on a less-known part of the world for a common cause and humanity’s sake.

And in our world of plenty

See also: Stuck in time, the Mad Hatter lives for another day

We can spread a smile of joy

Throw your arms around the world

At Christmas time

See also: Southeast Asia's growth to wane but still outperform

Unlike the recently concluded World Cup in Qatar, we were in a less self-indulgent activist age then. In some instances, we have become militant about the imposition of social and cultural values universally — whether Western values or G20 protests — because we are not alike other people and we have learnt less to live and let live, claiming grounds of morality that are often subjective. This theme distracted and dominated the narratives pre-Qatar’s World Cup.

Fortunately, after the kick-off, we were able to focus on football and enjoy the upsets of Japan, Korea and Saudi Arabia over Germany, Spain, Brazil and Argentina. We cheered the success of Morocco and celebrated the spectacle that brings almost all of the world together every four years.

But say a prayer

Pray for the other ones

At Christmas time it’s hard

But when you’re having fun

As the grudge match where the US triumphed over Iran has shown, politics and metaphors were never far away from the Beautiful Game. For many of the teams that did not make it to the finals, the themes of the rich North versus the poor South and other metaphors come to mind.

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Similarly, this past year has been an eventful one for the markets. These included the rotation to reality or great levelling of fluffy asset classes, the prevalence of “growth at all cost” investment attitudes, and the rise and fall of meme stocks. These broad themes were all balanced on the stilts of central bankers who kept easy monetary conditions throughout the pandemic, only to unleash inflation at multi-decade-highs which looks to be staying put for the foreseeable future.

Nonetheless, those who followed this column’s call to stay “Home Sweet Home” in the Straits Times Index in 2022 could still eke out a gain of around 7% return (index + dividends and a 1% forex gain against the mighty US dollar).

In contrast, the rest of the world, including the S&P, Nasdaq and North Asia were down by between 20% and 30%. Most other markets have had a significant foreign exchange loss to boot as the world rolled back to economic common prosperity blocs between the US-led West and China. More than three decades after the Berlin Wall fell, a new Cold War era is back as China replaces the former Soviet Union as the new competing great power to the US.

This coming year, the Straits Times Index may not repeat its best-performing market feat as China is poised to finally reopen to the world. But it is likely to continue to lead in total return versus Western markets. Its low volatility and positive dividend-carry equity return are still superior over risk-free Singapore T-bills that fetched 4.4% at the last auction. I will stay weighted and biased to Singapore, my home, and continue to buy on dips.

There’s a world outside your window

And it’s a world of dread and fear

Where the only water flowing is

The bitter sting of tears

Russia was the last host of the World Cup in 2018. It missed qualification this time round, distracted as it is by its invasion of Ukraine that went awry from earlier projections of a quick and easy victory. It is sadly ironic that the 1986 Chernobyl nuclear plant, which spread nuclear clouds across Europe after the accidental meltdown, is located in modern Ukraine, still toxically running down its radioactive halflife. Such is the European conundrum, given the proximity of its countries as they share burdens and risks including an ageing population and deficit spending, even as the euro continues to weaken in the new year.

However, from an investment perspective, there are positive economic ramifications from the war. Ukrainian cities and infrastructure need to be rebuilt eventually, and meanwhile, the West, lulled into years of peace under the protection of the US, is busy re-arming. Defence (including US companies), and energy and infrastructure contractors will continue to do well irrespective of the outcome of the war. Fossil energies will continue to be consumed in earnest as Saudi Arabia merrily sells to China in renminbi instead of the US dollar. India, needing to feed its growing economy, is guzzling on Russian oil, even with the US$60 ($81.3) per barrel cap that the West is trying to impose. Exxon, BP and Shell’s supernormal profits will continue as energy transition projects play catch-up notwithstanding COP27’s longer-term goals. Back home the industrial energy and marine sectors in Singapore including ST Engineering, Sembcorp Industries, Keppel Corp and Yangzijiang Shipbuilding (Holdings) post-restructuring look set to continue to benefit.

And the Christmas bells that ring there

Are the clanging chimes of doom

Well, tonight thank God it’s them instead of you

China’s earlier-than-anticipated emergence from Covid restrictions — an almost 180° about turn — was catalysed by protests in early December from Shanghai to Beijing.

The easing is ahead of a fuller vaccine roll-out for its elderly and preparations to stockpile and distribute both western and traditional covid treatment medicine. There has even been a mild run on “Lian Hua” (Chinese traditional Covid medicine) and ART kits in Singapore which were sent back to the mainland from its overseas diaspora — just like how masks and toilet paper disappeared off shelves from Bangkok to Tokyo in March 2020 before production normalised months after. This was partly due to China’s domestic population being shocked at the unbelievable sight of maskless crowds in Qatar stadiums even as they themselves were still in the final throes of restrictive lockdowns bubbling with discontent.

With China buying oil from the Arabs in renminbi, some economists have argued that Bretton Woods is now dead. We are seemingly meandering into a multipolar world. Besides the incumbent Western Swift system, China’s CIPS (Cross-Border Interbank Payment System) looks set to co-exist.

On Nov 11, Germany’s BioNTech, which famously developed the first vaccine with Pfizer from the US, is leaving the partner behind as it hammers out a joint venture with China’s Fosun Pharma to make mRNA vaccines. The following month, rumblings were heard of how the Dutch semiconductor equipment makers are willing to cut a deal with China. If true, America’s Chips and Science Act to contain China’s development looks to be a multi-billion-dollar political charade, slowing down but inevitably being unable to hold back its strategic competitor.

The revival of Chinese tech firms that could help with Beijing’s hightech chip goals coincided with a rare sighting of Jack Ma in Japan. This was another sign that sent China bulls seeing red, the auspicious colour of stock prices going up. We had earlier suggested that China’s post-20th plenum October selloff was a capitulation as China appeared ripe for reopening and refocusing on the economy. It was validated early on by the relaxation of rules on bank lending and towards the property sector. We had not expected China’s rapid Covid policy changes announced in early December. It seems more certain now that by the conclusion of the “Two Sessions” in March 2023, the self-isolated giant dragon will be the biggest growth and market opportunity for 2023, exporting capital to Asean and tourists to the world. Since our call in November, the markets have already started to build a base with more violent moves up than minor corrections.

And there won’t be snow in Africa this Christmas time

The greatest gift they’ll get this year is life, ohh

Where nothing ever grows

No rain or rivers flow

Do they know it’s Christmas time at all

Some readers of this column will recall that I was in Tanzania in August, raising funds for the Community Chest, which I now chair. This month, I will spend two weeks in Egypt before Christmas and will be going to Chad in February. That makes three trips to Africa in just six months. No, I am not on some mission trip nor am I on an expedition to suss out untapped natural resources to exploit. Rather, I have had a fascination for the continent since I was a child. With a population of around 1.4 billion projected to grow to at least 2.5 billion by 2050, its importance in the future world economy by sheer demographics alone is staggering. Apart from its role in climate change, carbon offsets, biodiversity and conservation, a commodity-rich, industrialising, educated, stable and growing Africa will have an impact on the world — not least the number of votes as a bloc they have in the UN. If endemic corruption and colonial legacy and debt could first be overcome, the promise is as immense as the size of its geography.

Sadly, 38 years after Do they know it’s Christmas hit the airwaves, Africa is still not self-sufficient. Until the Turks got the Russians to allow Ukrainian grain to get shipped, the impact of food inflation and energy shocks were asymmetrically felt in the continent where per capita GDP in some parts is US$1,500 ($2,028) — barely enough to cover an iPhone — versus US$73,000 in Singapore.

Hence, this Christmas time, as some of us look at the red ink in portfolios filled with 2021’s mistakes that we could not bear to cut our losses or bemoan the cost of that cup of kopi going up with inflation, let us put our First-World problems into perspective.

Count our blessings if we were spared the market volatility in sunny Singapore in 2022. Learn from our Fomo mistakes of the investing past and consider a gift or two in this season of giving in December. After all, charity begins at home in Singapore where the needs of those trapped at the bottom of our First-World city-state, are acute. You can still get a 2.5 times tax credit for donating to eligible IPC charities before the year is out. You can even consider donating your NS55 or Assurance Package Payouts if you don’t need the handouts. Please visit www.comchest.gov.sg/campaigns to be part of a good cause.

Feed the world

Let them know it’s Christmas time

Chew Sutat retired from the Singapore Exchange after 14 years as a member of its executive management team. During his watch, the exchange transformed from an Asian gateway into a global multi-asset exchange and he was awarded FOW’s lifetime achievement award. He serves as chairman of the Community Chest Singapore

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