Analysis on Regional Asset Allocation& U.S. CPI Data
Why is my investment heavier in Singapore than the U.S. market this time? Especially in an up-trending inflation and interest rates over the longer-term. Low inflation and interest rates ‘not likely to return anytime soon’, says PM Lee in a National Day message. This was the headline before PM adding-on to the geopolitical storm gathering momentum between nations.
In the following chart, we could see $( STI )$ outperformed $( Dow Jones)$, a flight to quality from U.S. to Singapore markets among investors since the start of 2022. Why?
• Singapore could be the only few countries with a concept plan (40-50 years) and master plan (10 to 15 years) and recent years in 2019 with a 100 years plan on environment. 80s high inflation style crisis could be in their contingency planning.
• Strong reserves to weather uncertainty, keeping companies afloat, providing jobs and investing in its people. Also, Singapore is in a good position for Sing dollar intervention to counter inflation and an potential financial warfare.
• With safe haven among global investors, it provides liquidity. Liquidity is an important asset in a time of uncertainty. Cash is still the king in a time of global insolvency.
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Another important inflationary data today, U.S. July inflation number CPI is scheduled to be announced later. Beginning of this year, inflation reached 7% for the first time in decades and since then it has been trending higher. June’s CPI has reached another record high at 9.1%. Many analysts forecast July CPI to be below 9.1%, but it is still not out of its danger zone.7% becomes a new benchmark to track if the inflation is losing its momentum. Studies show inflation starting in 2020, it is much steeper than those in the 70s and 80s.
Modify on 2022-10-14 17:15
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