Singapore (China) fact of the day

by on January 14, 2016 at 12:12 pm in Current Affairs, Data Source, Economics | Permalink

One of the worst-hit markets has been Singapore’s ; lost over a THIRD of its value from April last year

singaporemkt

From David Ingles.

1 rayward January 14, 2016 at 12:24 pm

What’s a country to do without a few Chinese billionaires. Cowen may have been impressed with Singapore, but it’s little more than a parasite, dependent as it is on billionaires and wealthy tourists who make their money someplace else. China, on the other hand, makes things people want, at least they want until they don’t, or don’t in numbers necessary to consume all of the things China makes. Never in the history of the world has there been productive capacity as it exists today, enough productive capacity to satisfy the needs and wants of most everyone on earth. But much of that productive capacity sits idle, while the world’s economists argue over theory and data and ideology and obsess over wild swings in financial markets dominated by billionaires.

2 Paul January 14, 2016 at 1:41 pm

Good argument, but I disagree on Singapore, it is not a parasite. It was a first world country before there were any Chinese billionaires.

3 Harun January 14, 2016 at 2:01 pm

Singapore is a parasite. Right.

Because they don’t “make things.”

(They actually do make things, but not gew-gaws in Walmart so that doesn’t count in your mind.)

4 Gochujang January 14, 2016 at 2:07 pm

Singapore has been a logistics hub as long as there has been global trade. They happily traded while China was sealed under Mao. They will trade with a slower China.

The bizarre thing about the crash is that if it were rational, it would be about a rational expectation of greatly reduced Pacific trade. I don’t buy that.

5 Gochujang2 January 14, 2016 at 4:47 pm

But to be fair I know nothing about investing or economics. Or anything else.

6 Gochujang January 14, 2016 at 9:04 pm

If you want to make a case for the decline of Singapore, dim clone 2, take a shot.

7 Gochujang2 January 14, 2016 at 9:36 pm

The market expects listed Singapore companies to be significantly less profitable in the future than it did a few weeks ago.

8 Gochujang January 15, 2016 at 7:52 am

That non-answer populates the nightly news, but that does not make it smart. See Shiller’s study on Black Monday.

9 Gochujang January 15, 2016 at 10:31 am

We don’t really have to go to Shiller.

We can back all the way up to Frans de Waal’s monkey, cucumber, grape experiment (possibly the greatest experiment in the history of economics).

In a big sell-off how do we know investors are not just throwing their cucumber back at the researcher?

10 Too Late January 15, 2016 at 11:21 am

@Gochujang “We can back all the way up to Frans de Waal’s monkey,”

In other words, investors are not fully rational. Duh. Humans are animals. Duh.

The good news is that now that you have figured that out, you are going to be able to make a killing on the Singapore stock market.

And if you don’t, I hope you will spare us with your facile bar stool psychology.

11 Gochujang January 15, 2016 at 11:50 am

Look up Barry Ritholtz, and “pants wearing monkeys”

12 JWatts January 14, 2016 at 2:19 pm

“But much of that productive capacity sits idle, while the world’s economists argue over theory and data and ideology …”

It seems a stretch to blame economists for idle productive capacity and it also seems foolish to assume that the world can always have 100% production at any given moment. Current world production and forecasting capabilities are far short of any such utopian ideal.

13 charlie January 14, 2016 at 12:37 pm

You can’t short China, they shoot you there.

But you can short everything else!

14 Millian January 14, 2016 at 12:39 pm

The clever, Oxford-alumni Singaporean civil servants will resolve this problem, right?

15 Andrew M January 14, 2016 at 1:56 pm

This isn’t a problem for government to resolve. The government should stay out of the markets; which is exactly what they’re doing.

16 iluvtacos January 14, 2016 at 3:38 pm

Good point. It’s interesting that we have become so accustomed to seeing massive government action at the hint of downturn in the economic/financial cycle that when we don’t see it, we assume government incompetence.

Singaporean civil servants may just be a bit more forward thinking and aware of the reality of the world than the rest of us.

17 Emerald City Resident January 14, 2016 at 5:52 pm

Let’s ask the Wizard! Surely he will know!

18 Millian January 15, 2016 at 4:26 am

Of course. By doing nothing for their large salaries, they prove their superiority.
The Singaporean government stays out of the markets. That’s a good one. Tell it again.

19 Gochujang January 14, 2016 at 1:30 pm

The old words of John Bogle ring in my head. “The S&P 500 provides adequate foreign market exposure.”

Bizarre to me that Singapore would be so linked to China, but unsurprising that small markets are dangerous in this way.

20 mulp January 14, 2016 at 1:34 pm

I assume it’s all Obama’s fault?

21 Harun January 14, 2016 at 2:02 pm

In Singapore, you blame Lee Kuan Yew, or the Malays.

22 JWatts January 14, 2016 at 2:21 pm

Are you admitting it’s not Reagan’s fault? Well that’s an unusual turn of events.

23 T. Shaw January 14, 2016 at 2:53 pm

Not at all. Obama believes that Singapore is the US’s 57th state.

24 Richard January 14, 2016 at 1:40 pm

Since crime is caused by growing poverty and economic despair, then, I’m sure Singapore’s crime rate must have gone through the roof. How are they dealing with the sudden chaos?

25 Harun January 14, 2016 at 2:05 pm

Singapore builds a lot of offshore oil drilling platforms. Oil price hurts them badly.

26 chuck martel January 14, 2016 at 4:59 pm

Singapore will do just fine if they never build another drilling platform. It’s truly bizarre that the media, and the people that accept their fantasies, are so concerned over an adjustment in oil prices. It’s as if historically high oil prices are good for everyone. A case could be made, and has been, that the sharp increase in crude prices that began in 1999 contributed significantly to the real estate crash and foreclosure crisis that followed. But now money in the wallets of consumers that hasn’t been spent on motor fuel can purchase Powerball tickets, designer pizzas and NFL tickets. What’s wrong with that? Maybe if oil prices don’t come back up to a satisfactory level, like housing prices, some kind of marketing program for selling breathable air can be initiated.

27 Harun January 14, 2016 at 6:39 pm

Oh, I know, I was just thinking what would knock the stock market down, and I know they are big in ship building and marine services, and those would be listed on the stock market.

28 T. Shaw January 14, 2016 at 2:36 pm

FYI Singapore is not China.

29 Fyodor January 14, 2016 at 5:41 pm

Singapore is closely connected to China via trade and financial flows, but there are also other factors at play, most notably the material rise in interest rates that began early last year.

MAS allowed the SGD to depreciate against the USD, decoupling SG rates from the US (check out SIBOR and SOR from the start of last year versus the previous five years). Given that the Singapore economy, particularly credit growth and housing, had been super-charged by deeply negative real interest rates, the move towards normalization has been depressive to domestic demand, and the Singapore equity market is heavily skewed to rate-sensitive stocks (notably banks and property companies). Hong Kong is now going through something similar given the increase in the US FFR and tight HKD-USD peg is driving up (HKD) HIBOR, though the China connection there is obviously overwhelming in comparison.

30 jim jones January 14, 2016 at 6:01 pm

Singapore exists because of Britain, a shame we didn`t do such a good job with America.

31 Chip January 14, 2016 at 6:34 pm

Singapore has more challenges than most countries and two in particular pose real trouble:

– tapering of oil flows from the Middle East as we shift to fracked and other energy threatens their refining

– automated manufacturing eliminates labor as a cost, reducing trade flows from low cost Asia via Singapore

But Singapore looks much further ahead than most too. They’re shifting their entire – and massive – port to the west in order to expand the business district.

This strengthens their attraction as a place to conduct business. Singapore is now the Asia-pacific HQ for over 40% of the Furtine top 300.

And they’re investing heavily in infrastructure and entrepreneurial clusters, to establish this as a place to create businesses.

32 Chip January 14, 2016 at 6:39 pm

Singapore has more challenges than most countries and two in particular pose real trouble:

– tapering of oil flows from the Middle East as we shift to fracked and other energy threatens their refining

– automated manufacturing eliminates labor as a cost, reducing trade flows from low cost Asia via Singapore

But Singapore looks much further ahead than most too. They’re shifting their entire – and massive – port to the west in order to expand the business district.

This strengthens their attraction as a place to conduct business. Singapore is now the Asia-Pacific HQ for over 40% of the Fortune top 300.

And they’re investing heavily in infrastructure and entrepreneurial clusters, to establish this as a place to create new business.

I suspect they want to become the Asian equivalent of Silicon Valley, a place where a concentration of money and talent acts as the draw for yet more money and talent.

Oil and trade flows can change, but smart, ambitious and wealthy people will always want to be around each other.

33 Gochujang January 14, 2016 at 9:27 pm

“automated manufacturing eliminates labor as a cost, reducing trade flows from low cost Asia via Singapore”

Years ago Apple manufactured in America. Wake me when they try again.

34 Harun January 15, 2016 at 11:14 am

Foxconn is supposedly building US plants. Or was considering it back in 2014.

But other production has been on-shored, including by Boeing, and other firms.

Keep in mind that Apple may have too much volume to switch – it would be someone else who does.

35 Gochujang January 15, 2016 at 11:55 am

I welcome the possibility, but from what I understand nothing yet show up in new manufacturing jobs, or as a reduction in port traffic.

Skepticism seems the safe bet.

36 B Cole January 14, 2016 at 7:48 pm

The Monetary Authority of Singapore has been suffocating the economy. Yet another central bank obsessed with inflation rather than growth.

37 Chris Hansen January 14, 2016 at 8:10 pm

One thing I’ve gained from reading blowhard Nassim Taleb is that there is nothing to learn from graphs like this that you don’t already know.

38 Benjamin Chua January 15, 2016 at 2:36 pm

Singapore is NOT (with emphasis) China. That you do not seem to know the difference is telling.

39 John Smith January 16, 2016 at 6:28 am

Do try to avoid showing off your ignorance here. You have failed to understand the implied message that Singapore is tied very closely to China in economic terms. He certainly did not meant that Singapore is part of China, which you would have understood merely by reading the comments even if you did not at first understand,

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