Singapore's Safe Haven Appeal Rises as US Assets Turn More Volatile

Investors Seek Respite Amid Trump's Tariff Flip-Flops and Potential Tax Cuts

- Kang Wan Chern

Singapore's safe haven appeal is rising as investors seek respite from the volatility unleashed by US President Donald Trump's tariff flip-flops and potential tax cuts.

Singapore equities have delivered a total return of 13 per cent since the start of 2025 – more than double the MSCI All Country World Index's 6 per cent gain. The gains come as investors move funds into safer and more stable stocks here, noted Morgan Stanley analysts on May 22.

One of the causes of market volatility is the so-called "Taco" trade, a term coined by Financial Times columnist Robert Armstrong referring to "Trump always chickens out" when it comes to imposing tariffs.

Each time Mr Trump backs down, stocks stage a rally.

The first notable Taco trade came on April 9, when Mr Trump paused the supersized tariffs he had proposed on April 2 after global stock markets plunged and longer-term US Treasury yields spiked.

Soon after, Mr Trump hinted at possibly removing Mr Jerome Powell as chairman of the US Federal Reserve, only to retreat once markets reacted sharply.

Other examples include an agreement to roll back US tariffs of 145 per cent to 30 per cent on most goods imported from China, and a similar pullback by China on US goods.

The US and China announced on May 12, after talks in Geneva, that there would be a further 90 days to negotiate and agree on tariffs. On cue, markets recovered.

The latest Taco trade was on May 26 and 27, when markets rallied after Mr Trump announced a delay to 50 per cent tariffs on goods from Europe.