Moving up one position from 2016, Singapore has been ranked the 6th-least corrupt country in the world. The country was given a score of 84/100 by Transparency International’s (TI) Corruptions Perceptions Index, which measures perceived levels of public sector corruption globally. Countries are rated from 0 to 100, with 0 being very corrupt and 100 being very clean, and Singapore was only second to New Zealand in the Asia Pacific region.
Singapore’s economy relies heavily on it being a sustainable business and financial hub, and scoring highly on the Corruption Perceptions Index can be considered a necessity. Global businesses are constantly looking for reliable countries to support their expansion plan and Singapore has successfully attracted them due to supportive business policies and its stable government.
Furthermore, the island nation is the only country in the South East Asian (SEA) region that made it to the top 20. Companies that want to expand to SEA and Asia in general are more likely to choose Singapore as their base of operations due to the ease of doing business here as compared to its neighbouring countries.
As a small nation with no natural resources, having a continuous flow of foreign investment is one of Singapore’s largest sources of revenue. Ranking highly on this index while maintaining its pro-business policies will ensure that Singapore remains competitive in the global market.
Even though share prices have rebounded, investors have continued to pull money out of US equity funds, signalling concerns that interest rates may rise further. Outflows from the week ending on 21 February 2018 moderated to US$2.4b (S$3.1b), after US$6.2b (S$8.1b) was withdrawn the previous week. These outflows follow a record withdrawal of US$33b (S$43.5b) in early February after the S&P 500 fell more than 10% from its record high.
With selling triggered by expectations of a rising interest rate and faster inflation, the US markets remain volatile as the Federal Reserve continues its policy discussions. The country seems to be heading toward an era of stronger growth, but it can also lead to higher wage costs and increasing commodity prices. It looks like balancing a robust economy and countering its negative effects could prove to be a challenge.
The CBOE Volatility Index – a market measure of implied volatility in the US stock market – has remained high, indicating that the market may still have big swings in its future. Because of this unpredictability, investors have increasingly turned to international equities, especially those from emerging markets. If this trend continues, the US dollar could continue to weaken while foreign markets reap the benefits for their respective countries.
China’s ruling party has proposed removing the two-term limit for the presidency, which could allow current President Xi Jinping to remain in power beyond 2023. Ever since the rule of Deng Xiaoping, the state constitution has limited the president and vice-president to two terms of five years in an attempt to institutionalise peaceful transitions of power. This was instated as a measure to prevent another Mao Zedong situation, who ruled the country for 30 years.
Removing the term limit may not necessarily be a bad thing. The Chinese premier is widely recognised in the international community as an effective leader who has progressively put policies in place to encourage foreign cooperation. After taking the reins in 2012, President Xi has had centralised power over China’s government bureaucracy and armed forces. He has also taken strong action against corruption, in which many senior officials have been arrested or forced to retire early.
However, under his presidency, China has progressively tightened its control over media, the internet, and in the last year, capital outflows. Its domestic policies seem to be more controlled, but it seems unlikely that the country will implement anything that will affect its relationship with other nations. Until the President is formally re-elected, it’s hard to say how this proposed amendment to the constitution is going to affect global investors.