Be it the volatility Chinese markets have experienced in recent months or the prospect of increased geopolitical uncertainty, the Singapore Exchange (SGX) has come to represent a stable alternative for investors seeking to access Asian markets.
Speaking on the sidelines of the 41st Annual International Futures Industry Conference in Boca Raton, Fla., executives from the SGX urged the assembled members of the media to not let the positive potential of Asian markets get lost in the headlines of volatility in Chinese markets.
“Asia is not just about China slowing down,” explained SGX chief executive officer Loh Boon Chye. “Asia is about growth.”
SGX executives also fielded questions about rising geopolitical tensions in Asia, especially in the South China Sea region. Tensions that see countries beginning to align over land grabs of the South China Sea and elsewhere might propel SGX into the position of a trusted third party market for outside investors seeking to harness the potential of Asian markets. The fact that Singapore does not have a land claim in the South China Sea paired with some of the strongest market regulations in Asia represents a net positive moving forward for SGX, according to executives of the exchange.
Forty percent of the companies listed on SGX are from outside Singapore and the bulk of cash flow is in U.S. dollars. In sidebar conversations, SGX executives made clear that they believe regional conflict escalating into military conflict is highly unlikely, but the possibility of sanctions or even blockades should be seen as potential catalysts for investors to see the strategically located Singapore as a safe access point for Asian markets.
The Strait of Malacca, which Singapore controls, is the main shipping channel between the Indian Ocean and the Pacific Ocean, linking major Asian economies such as India, Pakistan, China, Japan, Taiwan, and South Korea. Nearly 100,000 vessels pass through the strait each year, carrying about a quarter of the world’s traded goods and sea-transported oil. An SGX executive was quick to point out the strategic importance of the U.S. Navy’s Seventh Fleet being forward deployed to Singapore as another key factor in further legitimizing Singapore as a key worldwide economic hub.