Singapore’s Straits Times Index dropped the most among developed markets in August, as investors reportedly pulled out of Southeast Asia due to concern about a lack of global stimulus in the future.
The index dropped 7.5 percent in the 10 days up to Aug. 28, its biggest losing streak since 2002.
Overall, the benchmark gauge dropped 6 percent in August.
“Singapore is a barometer for Southeast Asia,” Wellian Wiranto, Singapore-based Asian investment strategist at Barclays Plc’s wealth-management unit, said in an interview on Aug. 28. “Choppiness elsewhere brings ripples here. Investors are probably concerned about the risk of contagion amid capital outflows from neighboring markets like Indonesia and the Philippines.”
“Singapore has been affected by redemptions from Asean since it’s the biggest market,” said Khiem Do, Hong Kong-based head of multi-asset strategy at Baring Asset Management Ltd., which manages about $57 billion. “It’s being lumped together with Indonesia, Thailand and the Philippines where capital outflows have accelerated.”
While Singapore’s assets are more attractive than those in neighboring Indonesia, investors may be choosing to sell their holdings in Singapore because the city-state’s currency is more stable, he said.
The Singapore dollar fell 0.3 percent against the U.S. dollar last month, compared with a 5.9 percent decline for the Indonesian rupiah, a 2.8 percent drop for the Thai baht, a 2.5 percent slide for the Philippine peso and a 1.2 percent loss for the Malaysian ringgit, according to data compiled by Bloomberg.
