Some investment ideas to consider as interest rates come down in Singapore

While the central bank’s Equity Market Development Programme (EQDP) initiative has spurred interest in Singapore equities, investors are also drawn to the Republic’s status as a relatively safer market.

- Chor Khieng Yuit

This pivot to Singapore equities comes at a time when interest rates on fixed deposits and Treasury bills are coming down, prompting investors to look elsewhere to earn a decent return on their spare cash.

The Sunday Times takes a look at two options that a risk-averse investor may want to consider.

SINGAPORE EQUITIES AND REITS

Mr Joey Choy, a remisier and trader at Phillip Securities, said he has noticed more interest in the Singapore markets.

Even clients who have stayed on the sidelines in recent years are “reengaging with the Singapore market” and looking at investing into stable, income-generating stocks, he added.

Mr Choy said an investor may want to consider a mix of exchange-traded funds (ETFs), blue chip names and Singapore-listed real estate investment trusts (S-Reits) in their portfolio.

ETFs are useful for those who do not want to pick stocks or who find it stressful to do so.

They are also suitable for investors who do not have the time to monitor the markets daily or who want to start small and build up their investment holdings gradually over time, he said.

There are three ETFs on the Singapore Exchange (SGX) tracking the benchmark Straits Times Index (STI): one by State Street Global Advisors and two by Amova Singapore.

Investors effectively gain exposure to the 30 largest and most liquid companies on the SGX through an ETF investment.

Mr Choy noted that blue chips like the three local banks, DBS Bank, UOB and OCBC Bank, or telco Singtel, can form part of any portfolio too, because these companies are relatively more stable and pay out dividends regularly.

The three banks are offering dividend yields of around 5 per cent, while Singtel has a yield of 2.83 per cent as at Sept 19.