SINGAPORE: Singapore retail traders have been ditching local stocks to invest in US stocks for better returns. Many Singapore investors, like Kelvin Tan, a 38-year-old content creator who trades on Interactive Brokers, started with Singapore stocks but switched entirely to US equities after seeing “flying” gains overseas.
According to Mr Tan, the US market was going very high, with individual stocks “just flying up”, while “Singapore stocks’ returns were not as good”.
Bloomberg reported that this trend is becoming more common among Singapore traders. According to Tiger Brokers, trading in local stocks dropped by over 11 percentage points in the past four years, while trading in US stocks increased.
Singapore’s market has faced challenges, including poor liquidity, a reliance on traditional sectors like banking and real estate investment trusts, and a lack of new listings. These contributed to a decline in the benchmark Straits Times Index’s trading volume, which hit a five-year low.
In response, Singapore authorities announced in 2024 that they were preparing “bold changes” to the market’s regulatory structures to address these issues and attract investors back. Meanwhile, the US market continues to draw attention with buzzy firms like Nvidia or Tesla.
For example, Singapore’s largest bank, DBS, moves an average of 1.3 per cent after earnings reports, a stark contrast to 9.7 per cent for Nvidia, according to Bloomberg data. With options widely available for US stocks, traders find it easier to make larger bets in the US market.
As Joshua Chim, general manager of online broker FSMOne Singapore said, “Investors want huge gains within a day”.
FSMOne data revealed that 43 per cent of their client investments went into US markets last year, up from 29 per cent in 2019. Meanwhile, the proportion of cash invested in Singapore stocks dropped from 60 per cent in 2019 to 49 per cent in 2024.
A survey by online broker Moomoo in October 2024 found that nearly half of Singapore investors wanted to increase their exposure to international markets.
John Huo, a private mandate service provider at PhillipCapital, said that international markets are now much cheaper to access, putting Singaporean companies at a disadvantage unless investors are encouraged to hold local stocks for the long term.
Market research has also shifted to digital platforms like YouTube, where content creators focus on overseas asset classes, said Gerald Wong, founder and CEO of Singapore-based financial advisory platform Beansprout.
Interactive Brokers CEO Lin Yujun said that Singapore investors have also recently become interested in Japanese and Chinese stocks. Even markets in Australia and Thailand see much higher daily trading volumes than Singapore, said Morgan Stanley analyst Nick Lord last year.
Still, Singapore’s market has seen some success. The benchmark Straits Times Index rose 17 per cent last year, reaching a record high in January, with banks driving the rally. This has sparked renewed interest from both retail and institutional investors, Singapore Exchange president Michael Syn told Bloomberg.
Nevertheless, many investors remain drawn to international markets that have delivered stronger long-term gains.
Mr Lin described Singaporeans as “very worldly”, noting that the more they are exposed to international companies and travel, the more aware they become of the need to diversify their investments away from the city-state. /TISG
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