Singapore has the perfect mix of stocks to weather the troubles of 2022, while worries about stagflation are causing losses in the world’s biggest developed markets.

The Straits Times Index, a benchmark for shares in the small Asian city-state, is up about 1% this year, making the cyclically-heavy gauge the only gauge of developed markets in positive territory in dollar terms. In contrast, the global figure is down nearly 23% in what could be the worst year since the 2008 global financial crisis.

Rising interest rates, a shift to cheaper valuations and economic threats posed by Singapore’s pandemic recovery have helped support the benchmark, where banks are about half-weighted.

“Singapore’s performance is correlated with value over growth, which is expected to continue as long as the Fed remains committed to reducing inflation to its long-term target,” said Alan Richardson, portfolio manager at Samsung Asset Management (HK). Ltd

Shares of DBS Group Holdings Ltd., the biggest stock on the STI, are up nearly 3% this year. Jardine Cycle & Carriage Ltd Auto Distributor. is the top performer, up 71%, while utilities Sembcorp Industries Ltd. noticed that its shares jumped by almost 54%.

Also helping was the absence of exposure to Singapore’s benchmark technology stock, which compares its performance to the US and European economies, which are grappling with issues ranging from inflation and energy shortages to supply chain disruptions.

“Until the Fed slows down or turns around, developed markets are unlikely to catch up” to Singapore, said Daniel Dubrowski, strategist at DailyFX. The market is focused on the Fed, even after a smaller-than-expected rate hike in Australia this week, and “there is still room in the labor market to absorb the short-term slowdown” in the US, he added.

Estimates of prospective earnings for Singapore stocks have risen about 16% year-to-date, about four times the growth seen for members of the global gauge. Still, the trade-dependent economy is not without risk, with factory activity falling in September for the first time since June 2020 and retail sales showing signs of slowing.

© 2022 Bloomberg

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