For a compelling combination of strong growth and low risk, look to Singapore, says Martin Spring in his On Target newsletter. The island state is aiming to become a “global city” amid an ongoing programme to bolster its international appeal. Having previously discouraged immigration, it now wants to boost its population from 4.35 million to 5.5 million. Immigration is already doubling the island’s population-growth rate and boosting property prices. The corporate-tax rate will now be cut further, while the transparent legal system and high quality of life are appealing to highly qualified professionals and entrepreneurs.
Singapore is also aiming to challenge Switzerland as a private-banking centre for the wealthy. Non-residents are exempt from capital gains or income tax and while Switzerland is “giving ground under pressure to the predation of Europe’s tax commissars”, Singapore resists international “intrusions”.
So although private assets under management still only total $200bn against Switzerland’s $1.5trn, Singapore is catching up fast, while the Swiss share has flatlined. Other ambitions include becoming a major medical tourism centre and trebling the number of patients within five years. Conventional tourism and biosciences are also set for a fillip.
“Singapore has planted new seedlings of economic growth”, and should expand by an annual 5.5%-6% through 2015, says CLSA – pretty impressive for a developed economy.
UBS takes the same view: with a record inflow of foreign direct investment, rising immigration and a strong residential property market, the stockmarket is “in the midst of a new secular growth phase”. On the downside, says Spring, it is the Asian state most exposed to the US economy. However, strong state and personal finances offer scope for stimulating domestic demand should the global economy falter, and Singapore’s businesses are constantly increasing their ties with fast-growing Asia. There is a US-listed ETF tracking the Singapore market (EWS), while Spring highlights stocks including niche residential-property developer Ho Bee Investment (H13, SGD1.50) and Raffles Medical Group (R01, SGD1.10) as worth a look.