SINGAPORE: Domestic financial markets have been resilient, while global risks such as macroeconomic uncertainty and geopolitical conflicts remain elevated, the Monetary Authority of Singapore (MAS) said on Wednesday (Nov 5).
While Singapore’s financial stress index – an indicator of stress and contagion – has “moderated from its peak in April to fall below its long-term average”, renewed trade conflict or increased global fiscal sustainability concerns could impact investor risk sentiment, said MAS.
“This could lead to potentially sharp corrections in international financial markets, especially amid relatively rich valuations and compressed risk premia.”
These are part of the findings presented in MAS’ annual financial stability review, which presents the regulator and central bank’s assessment of the resilience of Singapore’s financial system amid global risks and domestic vulnerabilities.
In April, Singapore’s financial stress index rose sharply after the announcement of US reciprocal tariffs, reflecting increased volatility in global financial markets, said MAS. However, the heightened risk aversion was “short-lived” and the stress level has since “eased considerably”, it added.
