\n<\/p>\n
If the “crisis of confidence” in the market translates into more companies worrying about jobs and investments, that will trickle down to Singapore, but if global trade is resilient, Singapore will not feel much of an effect, he said, adding that the government has tools at its disposal to support the economy.<\/p>\n
Mr Kumar of Maybank noted that Singapore’s fiscal position is strong and its diversified economy \u2013 spanning finance, manufacturing and trade \u2013 provides “substantial resilience against systemic shocks”.<\/p>\n
“Singapore’s diversified economy, well-capitalised banking sector and robust regulatory frameworks serve as important stabilisers that help cushion against such disruptions,” he said.<\/p>\n
Still, analysts are not expecting a global stock market crash owing to stretched valuations in tech and AI at the moment.<\/p>\n
For one, AI technology is still at its infancy, but is advancing at a rapid pace.<\/p>\n
Mr Chong Yik Ban, a research analyst at Phillip Securities Research, said that while concerns about an AI bubble are growing, he does not foresee a crash.<\/p>\n
\u201cNo one can forecast future AI applications with certainty and declare AI investment is a waste, especially when generative AI is still in its early stages of widespread adoption,\u201d he said.<\/p>\n
The investment into AI is well covered by companies\u2019 operating cash flow, and interest rate cuts will ease funding into AI spending, he added.<\/p>\n
\u201cI would argue that AI is not in a bubble at this stage,\u201d said Mr James Ooi, market strategist at Tiger Brokers.\u00a0<\/p>\n
He said the stock valuations are anchored by an \u201cexceptionally large addressable market\u201d, and pointed out that the Nasdaq-100 index is trading at around 37 times the companies\u2019 earnings, a far cry from the dot-com peak, where stock prices were trading at 175 times earnings.<\/p>\n
However, Mr Ooi cautioned that AI-related stocks are volatile and carry higher risk.<\/p>\n
\u201cMany AI names are already priced for perfection,\u201d he said.\u00a0<\/p>\n
\u201cThey have consistently delivered strong \u2018beat and raise\u2019 results, but the moment they fail to meet or exceed expectations, even a minor misstep could be heavily punished.\u201d<\/p>\n
In times of volatility, investors may start looking at alternatives that do not carry such risks.<\/p>\n
On this, Mr Ooi said consumer staples, shorter-duration high-grade bonds and gold exchange-traded funds are also possible defensive options.<\/p>\n
\u201cThese segments generally offer greater stability and more predictable income, providing a smoother ride when markets turn choppy,\u201d he said.<\/p>\n
For those who have a lower risk appetite, some might look within Singapore’s market too for investment alternatives.<\/p>\n
Mr Ooi pointed to real estate investment trusts and banks that pay dividends and have strong balance sheets <\/strong>as possible defensive plays.<\/p>\n \u201cSingapore blue chips have a strong track record of delivering stable dividends and demonstrating defensive characteristics, making them a steady anchor for investors in the current environment,\u201d he said.<\/p>\n Mr Glenn Tan, a portfolio manager at wealth advisory firm Providend, also said financial institutions and property developers are possible opportunities for investors.<\/p>\n He said local banks have seen stellar growth in wealth management-related fee income, which has allowed their profits to maintain or grow even when interest rates fall.<\/p>\n<\/div>\n