Singapore Stocks to Buy in the Current Trade Wars
The trade wars between America and China, as well as other regions in the world, affect more than just the territories actively involved, Singapore included. Policies from other countries can impact your investments in Singapore, which is why it is very important to be up to date on what is happening around the world and how it will affect your portfolio.
About trade wars
A trade war takes place when countries decide to place tariffs on imports of goods and services from other countries. This usually has a broader impact, especially when it comes to the economy. For example, in 2018 the United States announced that it will impose 10%-25% tariffs on goods coming from China. They decided to impose similar tariffs on aluminium, steel, cars and other items and the same applied to goods coming from selected other countries as well. As was expected, China and the other countries affected responded by increasing their own tariffs for goods coming from America.
Trade wars can affect consumers and businesses in Singapore, even though the city-state has tried not to get involved in the battle. Essentially, these tariffs are taxes that increase the prices of services or goods in the concerned countries. For example, a shirt, an iPhone or a Mercedes car will cost 10 per cent more if that country has imposed a 10 per cent tariff on that product.
Effects of the trade wars
Ever since the trade war between China and America began, many companies – including Caterpillar, Apple, and Starbucks in the United States, Daimler in Germany and Foxconn in Taiwan – have seen a major drop in sales as tariffs increased the prices of their products imported by other countries.
The biggest impact has been felt by businesses that produce goods in the affected countries ? China and the United States for example. However, the effects can be seen in other countries as well. For example, small suppliers in Malaysia or Singapore may experience profits or sales decline if Foxconn, Apple or other affected companies try to lower their profit margin in response.
Another effect of a trade war is that the countries affected will experience inflation. This can also affect share or bond prices. While the impacts of tariffs are complex, investors must understand that constructing a powerful portfolio in times of crisis can help them protect investments.
Stocks to buy in Singapore during the current trade war
While there are many possibilities for smart investment in Singapore during the trade war, buying stocks may be the simplest one. Here are two companies that it is recommended for business people to invest in now:
1. Old Chang Kee Ltd.
The first on the list is Old Chang Kee Ltd., which may sound somewhat familiar. The company produces the curry puffs Curry’O, which are very popular in Singapore. This is a good investment for Singaporeans because the company managed to keep the share price constant, even during the recent events of 2018. A share in this company costs $0.75 since the beginning of 2018 and it is clear that the firm has been doing well this year, despite the trade wars. The gross profit of the company has increased from 60.9% to 64.7%. Plus, the cash flow of the curry puffs’ producer has doubled this year, enabling the company to bring in $3 million, a great step forward from the negative free cash flow of the firm last year.
Investors would be happy to know that Old Chang Kee also reported a 55% increase in revenue from their events and catering business, which it has seen as a new area of growth. Old Chang Kee Ltd. is definitely an option worth considering for investors looking to buy stocks in Singapore.
2. Sheng Siong Group Ltd.
Sheng Siong Group has seen a rise of 23% in their share price this year, which is very impressive considering the trade wars occurring right now. At the beginning of the year, the share price was $0.93 and now it can be bought at $1.14. The company expanded with four new stores opening in 2017 and 2018, bringing the total number of stores to 48. Plus, the company has seen an increase in gross profit, reaching 27% in the first half of this year. The operating cash flow went up by 15%, reaching $43 million. Another positive for Sheng Siong Group is the balance sheet, which boasts $75 million cash with no debt.
Investors should consider Sheng Siong Group as a great alternative for stock investing in the trade wars right now.
3. APAC Realty
APAC Realty has earned the crown as being the best company in real estate services right now. Having secured more new launches this year than in 2017, the company is seeing continuous and significant growth in earnings, even during the economic wars of 2018. They have seen steady growth in the earnings of their non-brokerage segment as well, which shows some stability. With dividend yield standing at 4%, it’s worth investing in APAC realty stocks in 2018.
4. Moya Asia Holdings
The company takes pride in being the biggest player in the water treatment market of 2018 when working to capacity. With piped water becoming more of a necessity today, no trade war is going to affect their business.
5. Ascendas REIT
With an extremely diverse portfolio comprising 100-plus industrial properties across Australia and Singapore, Ascendas REIT certainly offers the perfect mix of growth and stability of earnings. A strong sponsor and a good management team allow the REIT to be in a great position to offer dividend growth even with all the market uncertainties. Besides, the 6% yield is certainly a lucrative offer for investors.
To conclude, it is indeed difficult to anticipate the effects tariffs and trade wars will have on the market. However, considering stocks in companies that are less affected by these fluctuations will be beneficial for the investment portfolio of any investor. Generally, investors who build diverse portfolios and select companies and sectors to invest in wisely will do well despite trade wars.
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