Far-flung Singapore investors can’t ignore Trump’s far-reaching tendencies
The globalised nature of trade, finance and geopolitics means that no economy is immune to his influence
ON THE face of it, Donald Trump’s political manoeuvres might seem far removed from Singapore’s stock market.
The US president’s moves to rename the Gulf of Mexico, mandate government employees to return to office and chastise the Ukrainian president may seem entertaining but remote to investors here.
However, the globalised nature of trade, finance and geopolitics means that no economy is immune to his influence.
Recent developments involving locally-listed companies – such as Hutchison Port’s sale of Panama assets and movements in Yangzijiang Shipbuilding’s share price – underscore how interconnected the Singapore market is with the shifting tides of global events.
As Trump makes headlines, investors in Singapore need to stay vigilant, especially as his rhetoric and policies could have wide-ranging consequences for stocks here.
Real and direct impact
Recent events have reinforced the point that Trump’s policies have a very real and direct impact on listcos here.
On Mar 5, Li Ka-shing’s Hong Kong-listed CK Hutchison inked a deal to sell its Panama ports to a US-led consortium, in a move seen by industry observers as a way for the company to avoid getting in the way of a standoff with Trump.
Trump has claimed that CK Hutchison’s ownership of two ports gave China control over the strategic waterway. The Republican leader has repeatedly threatened to use force to seize the canal.
The deal saw shares of the Hong Kong-listed firm rise by more than 20 per cent on Wednesday (Mar 5).
Morningstar senior equity analyst Dan Baker noted that CK Hutchison expects to receive at least US$19 billion for the assets – far greater than the research house’s previous valuation of US$10.5 billion for the group’s ports business.
Singapore-listed Hutchison Port Holding Trust (HPH Trust) , which is sponsored by CK Hutchison, rose 1.2 per cent.
Although the deal excludes terminals under HPH Trust, the consortium led by US asset manager BlackRock may play a bigger role in its future.
Meanwhile, shares of Yangzijiang Shipbuilding, one of the Singapore Exchange’s top-performing stocks last year, has fallen close to 11 per cent since the US Trade Representative office proposed to slap fees on Chinese-built vessels entering US ports on Feb 25.
Other Singapore-listed stocks have been luckier.
Singapore-listed US office real estate investment trusts (S-Reits) saw a weekly gain of more than 10 per cent after Trump signed an executive order mandating federal employees to return to in-person work earlier this year.
ST Engineering’s share price was also largely unscathed even though the Trump administration reversed the federal approval for New York City’s congestion pricing programme last month. ST Engineering’s US subsidiary, TransCore, runs the programme contract.
Remaining vulnerable
These stock movements are a reminder to Singapore investors to stay cautious.
While Singapore’s stock market has seen a resurgence of late – with the benchmark Straits Times Index hitting record highs – the broader market remains vulnerable.
Many locally listed companies have a presence in countries that will be impacted by looming trade wars or policies initiated by the US president.
For instance, coffee manufacturer Food Empire , which counts Russia and Eastern Europe as its traditional markets, could be affected by geopolitical instability brought about by the US’ stance on the Russia-Ukraine war.
Other listcos with presence in China’s market, such as CapitaLand China Trust , Hong Leong Asia and DFI Retail , may also get caught in the crosshairs of a trade war between the US and China.
Sectors in the spotlight
More than a month into his administration, it is timely for investors here to take another look at their portfolios and assess what they may stand to lose – or gain – from Trump’s policy moves.
Some sectors, in particular, have been in the spotlight. For example, Trump’s inclination to reshape trade policies will have a direct impact on the shipping and logistics sector here.
Investors in shipping-related stocks need to keep a close eye on any policies that might reignite the US-China trade war, as this could lead to volatility in port operators and logistics firms.
Another sector to watch is manufacturing. Stocks in this sector could be affected either negatively or positively depending on which side they land on in the trade war.
While some, particularly those linked with China, may take a direct hit, other listed companies could benefit from the fallout should suppliers turn to manufacturers outside of China.
Besides Trump’s external policies, domestic ones can also have an impact on locally listed stocks, as in the case of Trump’s reversal of New York City’s congestion pricing programme.
America’s other domestic policies, such as infrastructural or energy, can also have a knock-on effect on stocks here.
Ultimately, Singapore investors will have to be nimble to seize opportunities and mitigate negative impacts against a backdrop of shifting US policies under Trump.
