Last week, as global markets stumbled into October, Bloomberg ran a story with the headline “Singapore stocks index is the sole winner among developed markets”. This achievement is all the more remarkable, amid the strength of the US dollar thanks to the US Federal Reserve’s series of rate hikes to tame inflation.
The Straits Times Index was up 1% in US dollar terms may be nothing to shout about but the contrast is stark versus other major markets. The MSCI World Index is down 32%. Holding US stocks in US dollars may have given you a gain of 6% but the currency gains have all been rolled back by the 25% drop in the S&P and the 33% plunge in the Nasdaq. That is assuming that you have not invested in growth at all costs counters such as the Ark Innovation ETF and other new-fangled growth stocks or Grab Holdings, the world’s largest spac listing. The value of these counters has plummeted by over 70%.
Since its debut last September, this column has reminded local investors inflicted by the Pinkerton syndrome that currency translation back to where you are based needs to be an important consideration. Collecting Singdollar dividends from a basket of blue chips that makes up the Straits Times Index, has resulted in up to 30% extra money for holidays to Japan, South Korea, the UK and Europe for me.
