Stephanie Leung, Chief Investment Officer at StashAway, has highlighted the potential indirect risks that US tariffs could pose to Singapore’s economy. Whilst direct exports to the US account for approximately 8% to 9% of Singapore’s GDP, the broader concern lies in the tariffs’ impact on major Asian trading partners, such as China and Malaysia, which face tariffs of 54% and 24% respectively. Should these countries experience economic downturns, Singapore might feel the repercussions.
The ultimate effect of these tariffs will depend on the outcome of ongoing negotiations. Leung notes that previous tariff announcements, such as those involving Canada and Mexico, suggest that initial rates may serve as negotiation starting points rather than final terms. This uncertainty is reflected in market sentiment, with local equities and the Singapore dollar experiencing fluctuations amidst global risk-off conditions.
In the coming weeks, market volatility is expected to persist as details of tariff implementations and international responses unfold. Leung emphasises the importance of diversification for Singapore investors, noting that whilst the S&P 500 has declined by 4.8% since the start of the year, global equities outside the US have risen by 6%, and gold has surged by 19%. StashAway’s diversified portfolios have also shown positive returns, with gains of 2.1%, 2.3%, and 0.75% across different risk levels.
In summary, whilst the direct impact of US tariffs on Singapore may be limited, the indirect effects through regional partners could pose significant challenges. Investors are advised to maintain diversified portfolios to mitigate potential risks.
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