Yoshikami: The Singapore Opportunity
Flying into Singapore, it strikes me how much Singapore is a central hub for Asia. Mile after mile of ships line up in it's ports ready to distribute goods throughout the world from this important trade connection point.
As I mentioned in my previous blog, many investors do not recognize that investing in countries often means concentrated positions in specific sectors.
In the case of Singapore, trade and finance are the primary investment sectors. When trade came to a stop in 2008 during the financial crisis, hundreds of ships could be seen from high-rise skyscrapers, docked and not active in transactions. Conditions have certainly changed in a short two years; commerce is flowing once again.
Likewise the financial services business has bounced back from a difficult time and Singapore again is a busy hub for worldwide transactions within Asia.
Companies such as Standard Chartered and Citi use Singapore as an important financial center for regional business activities.
Additionally, the wealthy consider Singapore to be a safe haven for their financial dealings.
For that reason, money migrates here for investment and capital opportunities as Asian wealth mushrooms.
In addition to these two main sectors, Singapore is beginning to focus on embracing high-end technology and is providing companies such as VMWare , Cisco , and Applied Materials the necessary infrastructure to launch regional activities throughout Asia.
This is a trend that is welcomed by the government of Singapore and one can expect future emphasis in this area.
So how should an investor capture this regional opportunity?
ETF assets such as EWS, provide investors an opportunity to invest in this country in a diversified portfolio.
Other ETF positions are available but one needs to assess their composition carefully; not all ETF assets are constructed alike.
Individual assets can hold promise as well but be aware of local regulations and disclosure requirements.
Due diligence is very important when investing globally.
Singapore's position within Asia is well-suited to allow this small city-state to prosper. It is far from an emerging market and it still provides the opportunity for investors to participate in Asia and its explosive growth.
With GDP growth far in excess of most developed economies, Singapore is well-positioned to continue to capture the larger share of global GDP. It's clear that the next decade will see the emergence of Asia as a more powerful force in the world economy.
Michael A. Yoshikami, Ph.D., CFP®, is CEO, Founder, and Chairman of YCMNET’s Investment Committee at YCMNET Advisors, Inc., a registered investment advisory firm. He oversees all investment and research activities of YCMNET. He is a respected lecturer speaking frequently on market issues, tactical asset allocation, and investment strategy. Michael and YCMNET were ranked as one of the top 100 investment advisors in the United States for 2009 and 2010 by Barrons. He appears regularly on CNBC and CNBC Asia and can be reached directly at firstname.lastname@example.org