Analyst Martin D. Weiss hones in an an oft-ignored Asian country as a potentially big investment opportunity amid a sea of global uncertainty.
Much of the world is careening toward confusion and conflict.
Some of that darkness seems to be spreading to the United States.
And the next phase could be a massive minefield for investors.
I know something about this from personal experience. I lived many years under dictatorships in Latin America and experienced communism firsthand in Asia. I have studied, on site, every major world economy except India’s. And I’ve just returned from a 50-day round-the-world trip to some of the main trouble spots.
The European Union is suffering a decline that, in some respects, reminds me of the fall of the former Soviet Union. (See The Rise and Fall of Two Unions, 6 Big Eurozone Banks on the Brinkand European Countries Facing Turmoil.)
Russia is on a march toward war for similar reasons.
Turkey, Syria, Iraq and Iran are at the crossroads of new East-West conflicts. (This recent video I shot in Istanbul puts Turkey’s critical role in perspective.)
Saudi Arabia is moving forward with a new series of energy bombshells for the world. (See this video of mine from that region.)
Japan’s economic stability is skin deep. Beneath the surface is a time bomb that packs more megatons than virtually any other financial stress point in the world.
And perhaps of greatest direct concern to American investors …
The United States, itself, is bound to suffer the consequences of its widest social and political divides in almost a century. (See my recent article, New Civil Wars in America? and this year’s epic video, The Next Black Swans.)
Does this mean that every country in the world is sinking into a similar abyss? Have we lost every good model for stability and progress?
Not quite. And to prove it, on my last trip I made a point of visiting …
Singapore: One Country That Has
Largely Escaped the Madness
This small city-state already suffered its monumental life crisis a long time ago — soon after gaining full independence.
The society was splintered, with conflict-prone ethnic groups vying for economic and political control.
The government was riddled with corruption — bribery, nepotism, and more.
The economy? In shambles — national income down 20%, factories shuttered, unemployment through the roof.
This was the scary scene that confronted the country’s first Prime Minister, Lee Kuan Yew.
His back was up against the wall. He had nothing to lose. So he promptly proceeded to engineer an extreme makeover of Singapore’s political institutions, social structure and economy with a series of dramatic steps:
Step 1. Mr. Lee fought the cancer of corruption with a vengeance.
Carrot and stick in hand, he rewarded true public service with rich salaries and punished bribery with massive fines regardless of social status. Result: By 1997, Singapore was rated the least corrupt nation in Asia.
Step 2. Lee brought about a wholesale upgrade of the nation’s talent pool.
Under his leadership, the government gave big incentives to the world’s best universities to open branches in Singapore. It gave still more incentives to its brightest students to study abroad. And to attract the most brilliant minds overseas, it offered an easy path to immigration for those select individuals. Result: Singapore now has one of the highest-quality labor forces in the world.
Step 3. He created a world-class financial center.
Lee Kuan Yew saw a big hole in global financial markets. No, it wasn’t big deficits or illiquidity. Rather, it was something far simpler and more mundane: a time zone gap.
You see, in each 24-hour cycle, major global markets opened first in Frankfurt … then in London, New York and San Francisco. But moving West from San Francisco, there was no financial center that was adequately linked up with Western markets and banks.
Singapore’s banks and markets jumped in to fill the gap, solidifying the round-the-clock global markpetplace we have today.
Step 4. He transformed Singapore into a world-class safe haven with an unblemished reputation.
His government issued local licenses exclusively to banks with stellar balance sheets and track records.
At the same time, it promptly filed lawsuits against institutions with suspicious activities — regardless of their reputation in foreign countries.
Plus, they created the Singapore International Monetary Exchange (SIMEX), awarded “Stock Exchange of the Year” in 1998.
Right now, Singapore ranks as the third most important financial center in the world, based on over 100 indices provided by the World Bank, the Economist Intelligence Unit, and the OECD.
In terms of financial privacy and secrecy, Singapore ranks fourth, just behind Switzerland. And as Swiss banks make it harder for global investors to keep their financial transactions confidential, many have shifted to Singapore, helping to spur a massive jump of capital inflows.
Bottom line: Singapore’s GDP per capita ranks third in the world, seven steps above the United States, according to the IMF.
And I can personally tell you, without hesitation, that it’s a wonderful place to live, study or do business.
No country is perfect. And Singapore also has issues.
But like in Japan, crime rates are among the lowest in the world.
Like in Switzerland, different cultures and languages are encouraged to flourish, while English has emerged as the primary lingua franca for business and higher education.
Like Palm Beach Gardens or Palm Springs, greenery and flowers are abundant.
But unlike virtually every other major city in the Third World, traffic nightmares are extremely rare.
Some takeaways …
Savers: Given the unpredictability of coming events in nearly every major nation on the planet, if you want a second safe haven for cash assets, Singapore offers a very viable alternative.
In fact, Singapore has three of the 44 largest global banks in the world with high Weiss Ratings: DBS Group Holdings, Oversea-Chinese Banking Corp., and United Overseas Bank.
Real estate investors: Singapore’s residential properties are among the most expensive in the world. But they recently posted their 10th consecutive quarterly decline, down 9% from their peak in September 2013, mostly thanks to the government’s deliberate efforts to cool down an earlier boom. As soon as those measures are relaxed, however, prices are expected to go back up.
Wannabe government leaders and followers: If you sincerely want to “make America great again,” be “stronger together,” “create our best America yet,” live in “a future to believe in,” make sure “it’s in our hands,” see “a new American century,” “reignite the promise of America,” or “heal, inspire and revive” with “new possibilities and new leadership” to “unleash the American dream,” then maybe you should take a closer look at some of Singapore’s practical lessons as taught and practiced by Lee Kuan Yew.
A few weeks ago, at the Singapore Botanic Gardens, I saw the tree he once planted, celebrating “50 years of greening” and “a lifetime of nature.”
But alas, its broader symbolic importance has yet to be discovered by most investors and world leaders.
The iShares MSCI Singapore Index Fund ETF (NYSE:EWS) was inactive in premarket trading Monday at $10.42 per share. Year-to-date, the only ETF focused on Singapore equities has gained 1.36%.
This article is brought to you courtesy of Money and Markets.