Singapore : 10Y yield, STI and USDSGD
Current levels :
10Y SGS 2.51%
USDSGD 1.2510
STI 3115.86
It looks like this.
The historical correlation between the STI and the USDSGD is very strong and negative, along with the 6M SOR fixing. The higher USDSGD and higher interest rates, the lower the STI.
The 10Y SGS correlates better with GDP in that, higher yields equate to higher GDP growth.
In the last 12 months, we find new and stronger correlations emerging.
1. STI with the 10Y bond yield, a negative correlation
2. USDSGD and the 10Y bond yield, a positive correlation
It would appear that the market is paying more attention to long end rates and trading the blue chips (dividend return) versus bonds.
The USDSGD has become a laggard against the stock market because policy has appeared to have taken a back seat as the government pursues qualitative measures to tackle asset inflation against a stable CPI.
We are seeing a new uptrend in the 10Y yield again and stocks have reacted little as trading volumes wane and the stock market is plagued by small cap stock scandals.
What to expect :
1. USDSGD 1.2620 near term.
2. FSSTI 3050 near term.
STI is rubbish. All markets hitting new highs. STI is still languishing at current levels.
Singaporeans are usually ahead of the curve ?
Look at KLCI at its record high just like the S&P 500.
Volume increasing these couple of days coupled with broad-based market weakness, looks like more fund outflows as people position for next year – long DM, underweight EM (unfortunately, Singapore is treated like EM).
Singapore is the 2nd worst performing market today after the Philippines!
Singaporean have the bulk of their wealth tied up in real estate. Nobody other than fund managers really cares about the stock mkt here. Volume is pathetic, eg a few days back I did a calculation, the avg turnover of Citigroup is around 1% of mkt cap daily. The avg of the big 3 banks here is 0.2%!
Investors should be worried about the 200k residential units that will be completed in the next 3 years plus another 500k to be built after 2016.
The question that should be asked is whether the population is growing 570-600k in the next 3 years (assume 3 to a unit and 5% vacancy).
Haha. Maybe its due to the Singapore household wealth increase and there are not enough equities/assets to buy for them.