Singapore has been a ”safe haven” in the past but not anymore … where its currency SGD is a popular short against other Asian FX and the implied volatilities of S’pore’s various asset classes have risen more vs its historical. On the contrary, many of its previously less than able neighbours have seen their implied volatilities collapsed vs their historical (*this will be addressed in another piece in the future).
The General Elections in May 2011 and the Presidential Elections in August 2011 have seen the Straits Times index (FSSTI) fallen by between 4% to 10%, from nomination day to 4 weeks after the respective election dates. Financial markets do not like to handle the rising odds of increasing negative tail-risks associated with Singapore. The previously dominant ruling political party, People’s Action Party (PAP) is now seen as weakening, ineffective, irrelevant and even the cause of the major problems affecting Singapore now that they do not seem to have any new tricks to pull from the old hat.
While we scratch our heads wondering what will happen in the upcoming Punggol East by-elections on 26 January 2013 with nomination date on 16 January 2013 … SELL SELL SELL all longs in Singapore stocks (*where it has been a nice 10% Christmas rally from late 2012) and go short even if history is a guide!
May the best Man and Party win … or rather the best SHORTS win!
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