Schroders, Baring avoiding Singapore stocks

[SINGAPORE] Schroders plc and Baring Asset Management Ltd are avoiding Singapore stocks, the cheapest in South-east Asia, as slower economic growth in the region and cuts to Federal Reserve stimulus drive capital outflows.

The fund managers expect property to lead declines in Singapore amid a real-estate slump and the prospect of higher interest rates. The Straits Times Index was the worst-performing developed market in 2013, dropping 9.5 per cent since Fed chairman Ben Bernanke said in May that bond purchases may be reduced on signs of sustainable US recovery.

Capital has been fleeing South-east Asia as investors seek higher returns in North America. The market value of Singapore shares fell 5.6 per cent to US$567 billion this year as at Monday as 10-year US bond yields climbed to a two-year high in September, making dividends from the city-state's real-estate investment trusts less attractive.