The Singapore stock index is the only one year-on-year up among developed markets

Amid worries about stagflation in the world’s largest developed markets, Singapore stocks have performed remarkably well this year.

The Straits Times Index is up about 1% in 2022, the only developed market indicator with positive territory in dollar terms. In turn, the global index fell 22% a year, which could be the worst since the 2008 global financial crisis.

Higher interest rates, a shift to lower valuations, and Singapore’s gradual recovery from the pandemic have helped support the benchmark, with banks accounting for about half the weight.

Singapore’s performance correlates with the outperformance of value over growth, which may continue as long as the Fed continues to raise interest rates to fight inflation.

The lack of benchmark impact on tech stocks also helped, in contrast to the performance of the US and Europe, whose economies are struggling with inflation, an energy crisis, and supply chain disruptions.

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“Until the Fed slows or pivots, developed markets probably won’t catch up” with Singapore, said Daniel Dubrovsky, strategist at DailyFX. The market is focused on the Fed, even after Australia’s smaller-than-expected rate hike this week, and “there is still room for the labor market to absorb a near-term slowdown” in the US, he added.

Interim earnings estimates for Singaporean equities are up about 16% year-to-date, about four times those of global scale members. At the same time, Singapore’s trade-dependent economy is not without risk, with factory production cutting in September for the first time since June 2020 and retail sales slowing.

Auto distributor of Jardine Cycle & Carriage Ltd. leads the Straits Times Index this year with a 72% increase, followed by utility company Sembcorp Industries Ltd. with a 53% increase. Shares of DBS Group Holdings Ltd., the largest company in the ranking, rose 2.3%.