KELVIN Tan began investing online in 2018 and, like many Singaporeans, put all of his money into local stocks. Two years later, he had switched entirely into US equities.
“The US market was going very high – individual stocks were just flying up,” said the 38-year-old content creator who trades on Interactive Brokers. “I realised Singapore stocks’ returns were not as good.”
Tan is among a growing group of Singapore investors shifting away from local stocks in favour of US markets. Among Tiger Brokers’ Singapore retail clients, the proportion of trading in local stocks has declined more than 11 percentage points in the past four years, while the majority trading in US stocks has increased.
That adds to the urgency for Singapore’s authorities, which last year said they were preparing “bold changes” to market regulatory structures.
Issues of poor liquidity, a market dominated by old-economy sectors and a dearth of new listings, which have contributed to a decline in turnover for the benchmark Straits Times Index (STI) to a five-year low, need to be addressed for Singapore to lure back retail investors.
Singapore’s stocks tend to be from more staid asset classes such as real estate investment trusts and banks, versus high-flying, buzzy firms such as Nvidia or Tesla.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
For instance, DBS – the city-state’s largest bank – moves an average of 1.3 per cent after earnings reports, according to data compiled by Bloomberg. That is versus 9.7 per cent for Nvidia. Add in the availability of options on US stocks, and it is simply much easier to carry out big bets in the US market.
“Investors want huge gains within a day,” said Joshua Chim, general manager of online broker FSMOne Singapore.
For total investments made by FSMOne stocks and exchange-traded-fund (ETF) clients, who are mainly retail investors and based in or from Singapore, 43 per cent of their cash went into US markets in 2024, up from 29 per cent in 2019.
Meanwhile, 49 per cent of their cash went into the Singapore market in 2024, down from 60 per cent in 2019. A survey in October by online broker Moomoo found that close to half of Singaporean investors are looking to increase international exposure.
This desire is likely strengthened by the design of online brokerage platforms, which often encourage users to choose more liquid or volatile assets as well as shorter-term trades, all of which are more readily found outside Singapore.
“International markets can be accessed at much cheaper rates than before,” according to John Huo, a private mandate service provider under PhillipCapital. That may disadvantage Singaporean companies unless there is an educational push encouraging investors to hold Singapore stocks “for the long run”, he added.
In addition, with market research now increasingly consumed on digital channels such as YouTube rather than via conventional written reports, “there’s a lot of content towards overseas asset classes”, said Gerald Wong, the founder and chief executive officer of Singapore-based financial advisory platform Beansprout.
Case in point: Fitness trainer Benjamin Tan, 32, educated himself about markets online. He was inspired by content about the US to begin putting S$1,000 into American assets including ETFs every month via online broker applications.
It is not just the US that Singaporeans like. Investors trading on Interactive Brokers Singapore have recently displayed a strong interest in Japanese and mainland Chinese shares, said its CEO Lin Yujun.
Even other regional markets such as Australia and Thailand have far higher daily traded volumes than Singapore, Morgan Stanley analysts including Nick Lord wrote in a note late last year.
The Singapore market has had its successes of late, of course. The benchmark STI rose 17 per cent in 2024 and hit a record high in January, boosted particularly by banks.
The rally has driven an influx of interest from retail and institutions into the market, Singapore Exchange (SGX) president Michael Syn said. SGX shares hit their highest level since 2007 on Feb 7, amid optimism about its outlook with reforms ahead.
Tiger Brokers also noted that the number of Singaporean retail clients actively trading local stocks on SGX in 2024 increased 9.9% from the previous year.
But, until fundamental changes are made in Singapore, international markets, which have done far better over longer periods, still may be more appealing to many, said observers.
“Singaporeans are very worldly,” Interactive Brokers’ Lin said. “The more we travel and work with international companies, the more aware we are about the need to diversify our investments away from Singapore.” BLOOMBERG
