Probably the first thing that comes to your mind reading this title is “I am not a multinational corporation or even a big corporation that can think about investing in Singapore”. But then maybe as an individual investor you tinker with “why should I invest in Singapore? Or how can I invest in the Singapore market”?
Late in 2006 I read a book on Singapore’s Success, written by Henri Ghesquiere, former Director of the IMF-Singapore Regional Training Institute, and also a staff member for over 25 years of the IMF.
This book provides thoughtful insights on how Singapore has developed “from a Third World country into a First World nation in one generation”, as stated by Prime Minister Lee Kuan Yew.
Singapore’s Success is a wonderful textbook for people to learn from about economic growth but also how growth can be combined with solid policies, institutions, values and leadership.
In his book Ghesquiere argues that “Singapore has engineerd prosperity through enlightened strategy”. Key themes are: the role of savings, labor participation, immigration, sharing of opportunities, better health and education, flexible wage policies, fiscal discipline, integrity and competent governance.
Singapore has in a short time achieved impressive results! Hence if Singapore were a stock, it certainly would qualify to be on your shortlist.
Investing in Singapore through stocks traded on the Singapore exchange is complicated. Far easier is to consider the iShares exchange-trade-fund for Singapore. The symbol is EWS.
The chart below shows that in 2006 EWS increased by 57%. Since January 3, 2007 till the close of yesterday (02/22/07) EWS moved from $11.40 to $12.22, or increased by 9.1%. Compare this to the S&P500 in the same period; it moved by only 2.6% (second chart).
Source: Reuters.
Going back to an earlier article on ETFs you read that Morningstar started with a star rating system for ETFs. If you consult their new publication on “150 ETFs”, you will find in the back of the book that EWS is one of the five lowest Morningstar rated ETFs (together with the iShares for the Netherlands, Mexico, Hong Kong, Germany). Maybe Morningstar researchers should read Singapore’s Success before allocating stars! Or maybe we found a way to read the Morningstar stars: the lowest ranked are some of the best performing ones in recent times...
Source: Big Charts
In sum, country ETFs such as EWS, EWH (Hong Kong), EWA (Australia), EWW (Mexico), EWZ (Brazil) may be a neat way to design your own portfolio for global investing (or your own benchmark against which to monitor your globally invested portfolio). A benchmark composed of some of the fastest growing economies in the world would definitely be and improvement over a cap weighted Morgan Stanley index such as MSCI World Stock index.
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