Why I’m De-emphasising Singapore in my Investment Portfolio

As with most newbie investors searching online for how to invest, I learnt about dollar-cost averaging and buying indices. A Singapore Index exchange-traded fund invariably ended up being the first investment I bought on a monthly basis, a prime example of familiarity bias where my fondness and association with Singapore led my investment decision.

Many years have passed and I have since de-emphasised investing in Singapore in order to put money towards other more promising options. Don’t get me wrong; I’m still very much vested in Singapore, but here’re some reasons why I am reducing my exposure to Singaporean equities.

Singapore’s market is… unexciting

I’m a big fan of a Paul Samuelson quote: Investing should be more like watching paint dry or watching grass grow. But I think there comes a point where it feels a little like watching grass grow under rather arid conditions.

As much as I am not a very risk seeking person, I feel that Singaporean companies are too slow and steady for even my relatively conservative risk appetite. China and US have their tech companies with global reach and aggressive growths, and Singapore has… Razer which chose to list in Hong Kong where trading volume is about 10 times that of Singapore.

I personally don’t see many high-growth stories in Singapore’s market that a couple of other markets offer.

Singapore’s driven by… a driver and a co-driver

I’m not sure I want to be overly political here, but it’s very difficult to divorce Singapore from its politics. Singapore’s economy is heavily dependent on a top-down approach, and while that has obviously worked very well for us over the past few decades, whether it’d continue to remain this way is quite concerning.

I feel that the main risks Singapore faces is having a drop in quality of the incumbent government, and/or having a more charismatic challenger of dubious ability take over the reins. These risks aren’t very far-off possibilities, and the way I see it might very well manifest over the next couple of decades or so. I hope I’m wrong, but we’ll see.

Singapore’s is where I belong… as well as my job, business, property etc.

This is perhaps the biggest reason I am underweighting Singapore in my portfolio, and it’s simply good old diversification. Having recently bought an apartment, my asset allocation has skewed really heavily towards Singapore. My job, business, and even this site, derive income solely from Singapore.

A single crisis that hits Singapore particularly hard may result in my income being affected, my property losing its value, and a Singapore-heavy investment portfolio suffering losses. That’s just too many eggs in a single basket.

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What about you? Do you agree or disagree with my views on Singapore’s outlook? I think a diversity of views is important when it comes to investing, and I would love you hear from you.

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