By Craig Mellow

Singapore's prime minister is worried about his country. Investors aren't, for the moment.

Lawrence Wong sounded less than celebratory marking the 60th anniversary of Singapore's independence Aug. 8. The city state of six million faces a "fork in the road," he warned. "The global order that enabled Singapore to thrive for decades is unraveling before our eyes."

With the world's busiest port outside China and an open door to investment, Singapore has been an ultimate winner from the globalization now under vociferous attack in Washington. Trade volumes consistently triple gross domestic product.

Markets remain upbeat nonetheless. The iShares MSCI Singapore exchange-traded fund has soared nearly 30% this year. The Singapore dollar is up 7% against the greenback.

Trade and shipping hardly register in the stock market, which is tilted toward Singapore's other forte, finance. Three of the top four names are banks and/or asset managers: DBS Group Holdings, Oversea-Chinese Banking Corp., and Keppel. Hefty dividends, solid capital cushions, and growing wealth management franchises make them attractive havens in a volatile world, says Sat Duhra, a portfolio manager at Janus Henderson Investors. "We own large positions in Singapore banks," he says. "Their defensive nature is appealing in the current environment." Rounding out Singapore's Big Four is Sea, an e-commerce and digital finance conglomerate whose shares are finally rebounding from a postpandemic meltdown.

Singapore's vulnerability on trade may also prove exaggerated. The U.S. accounted for just a tenth of the country's merchandise trade last year, according to official statistics. Trade within Asia dominates. The port of Singapore's only serious regional rival is Shanghai, notes Joshua Kurlantzick, senior fellow for Southeast Asia at the Council on Foreign Relations. "There isn't really another option anywhere near there," he says.

Singapore has prepared the ground for economic diversification with typical foresight. The country unveiled a national artificial intelligence strategy in 2019, later committing $1 billion Singapore dollars ($780 million) in state funds to kick-start the sector. One consequence is Singapore Telecommunications' emergence as a data center power. Its stock is up by a third this year.

Singapore's pharmaceutical sector is growing fast, Bain & Co. finds in a recent report. "Global pharma is sourcing innovation from the Asia-Pacific region," the consultant says. "Singapore is emerging due to its commitment to innovation, political neutrality, and intellectual property protection."

Singapore lately surpassed Thailand as Asia's top destination for medical tourism, adds Herald van der Linde, chief Asia equity strategist at HSBC.

"I expect Singapore to continue to move up the value chain," concludes Xin-Yao Ng, an investment director for Asian equities at Aberdeen Investments.

Wong's toughest challenges may be domestic. Singapore's impressive $93,000 gross domestic product per capita belies growing income inequality, exacerbated by a housing shortage that is fraying the traditional guarantee of affordable state apartments. "How well has GDP growth percolated down to Singapore citizens?" Manu Bhaskaran, Singapore-based CEO of Centennial Asia Advisors, asks rhetorically. "Some progress has been made on expanding social safety nets, but it's not enough."

From investors' perspective, Singapore looks ready to take the right fork, adapting anew to a multipolar world of U.S. nationalist retreat. "Ultimately you have a country of six million that is the financial and knowledge center for a region of hundreds of millions," Van der Linde says.

Hard to go too far wrong.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

August 14, 2025 04:00 ET (08:00 GMT)

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