Singapore investors still on long-term 'sell' on Wall Street

Singapore

SINGAPORE-BASED investors capitalised on a 4 per cent rise in the S&P 500 and a 9 per cent gain for the Dow Jones Industrial Average in 2016's fourth quarter by selling into strength - the latest US Treasury data showed them disposing of a net US$972 million of New York Stock Exchange (NYSE ) shares during that period.

The data also showed Singapore-based purchases in the third quarter amounted to a net US$3.6 billion, so some element of "profit-taking'' drove the sales.

Other Asian investors also seemed to be doing likewise. They collectively sold a net US$4 billion in US equities October-December 2016, following a net purchase of US$1.3 billion in the preceding quarter.

Hong Kong investors, who liquidated a net US$3 billion of the stocks in the final quarter of the year, accounted for the bulk of the Asian sales in that period. They disposed of an even bigger chunk - US$4.9 billion - of shares in the US stock market in the quarter before.

But Japanese players, traditionally the biggest buyers from this region of US equities, were among the few Asian investors still not tired of buying. They snapped up US$434 million of US shares in the fourth quarter of last year. This came after they bought US$3.7 billion of US stocks in the preceding quarter.

South Korean investors also continued to be active buyers on Wall Street in the quarter, picking up US$853 million of stocks - about half the value of their purchase in the third quarter.

For the whole of 2016, Asians sold a net US$5.4 billion in US equities in a year when the S&P climbed 9.5 per cent, the Dow Jones jumped 13.4 per cent and the Nasdaq was up 7.5 per cent.

Yet there might be deeper reasons than just profit-taking for the Singapore investors' sales. The investors have been in a "sell" mode in the first half of 2016. Before that, they were letting go of US stocks for three straight quarters in 2015.

Only in the last three months of the year did Singapore investors break the trend to buy some stocks but it was just a breather. The investors resumed selling in the first two quarters of 2016.

In all of last year, Singapore investors sold a net US$615 million of stocks on the US bourse.

The long-term withdrawal from US equities could reflect many market observers' belief that Singapore investors, still the second largest Asian investors on Wall Street, are finding they can make higher returns in stock markets closer to home - and are shifting their money back into Asia.

Globally, although investors remained fans of NYSE-listed stocks, there were signs of waning interest.

They bought a net US$4.8 billion of equities in the fourth quarter of last year, a big comedown from the net US$25.6 billion acquisitions in the third quarter. In total, global investors scooped up a net US$12.9 billion of US equities in 2016.

US investors apparently have already been tipped off about hot Asian stocks. The latest US Treasury data available by year showed US holdings of Asian equities amounted to a market value of US$1.5 trillion as at end-2015. That's equivalent to the value of US investors' entire euro portfolio, which included equities listed in Spain, Belgium, Finland, France, Germany, Italy and the Netherlands.

While Japan accounted for over a third - US$684 billion - of the US holdings of Asian equities, South Korea (US$131 billion), Hong Kong (US$124 billion), India (US$119 billion), Taiwan (US$108 billion), China (US$98 billion) and Singapore (US$77 billion) also figured large in the holdings.

US investors chalked up net purchases of US$2.2 billion in Asian stock markets in the fourth quarter and US$7.8 billion in the third quarter of 2016, but they were net sellers of Asian equities for the whole of last year to the tune of US$2.7 billion, having disposed of a net US$12.8 billion in the first half of 2016, with most of the sales done in the first quarter.

But in Singapore, US investors wrapped up the year with net acquisitions totalling US$13 million. They started the year as sellers, liquidating a net US$388 million of shares listed on the Singapore Exchange in the first quarter. In the next two quarters, US investors picked up a net US$1.5 billion of Singapore equities.

The final quarter of 2016 saw the investors reverting to selling, dumping a net US$1.0 billion of Singapore stocks.