What a Trump win means for Singapore

The US dollar may not dip that badly, but anxiety looms for those planning to work or study in the US

Financial markets

Stock markets in Singapore and across Asia will see an immediate decline, said IG market strategist Bernard Aw.

Yesterday, Singapore stocks finished 1.1 per cent lower, with the benchmark Straits Times Index losing 30.36 points to 2,789.88.

A large part of it is caused by the uncertainty brought about by a Trump administration, Mr Aw told The New Paper.

"Investors are a little concerned about how this will change America's political strategy, foreign and trade policies towards other countries.

"This concern will stay till there is more clarity from Mr Trump himself."

The US presidential election result is reminiscent of Britain's Brexit result in June in terms of the surprise factor, he said.

"But if you look at the data, stock markets recovered quite strongly in August.

"Your guess is as good as mine what will come next," he added.

Do not expect the US dollar to dip like the sterling, Mr Aw said.

The Singapore dollar might appreciate against the greenback, but not to a large extent because it is the world's reserve currency, he explained.

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Jobs / Trade

For Singapore, whose economy is plugged into the world economy, the quicker the markets bounce back, the better.

But this will only happen when there is domestic political stability, greater certainty in economic policy, and most of all, consumer confidence. Until then, jobs creation is likely to be be subdued, said Dr Mustafa Izzuddin from the Iseas-Yusof Ishak Institute.

The Trans-Pacific Partnership (TPP), a free-trade pact that the US signed with 11 Pacific-Rim nations, including Singapore, will also be of concern, said Dr Mustafa.

Singapore companies would have benefited from the historic deal to ease trade in goods and services among the member nations, which make up about 40 per cent of the world economy.

"Given that Mr Trump is opposed to the TPP, as asserted during the electoral campaign, the TPP signatories... would want to know whether the TPP is still on the table for negotiation, or that it will be scrapped altogether so long as Mr Trump is president," he said.

Some Republicans have already asserted that the TPP is all but dead, with Alabama Senator Jeff Sessions saying: "There will be blood all over the floor if somebody tries to move that through the Congress any time soon."

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Defence / Security

For Singapore and other South-east Asian nations, the burning question is whether Mr Trump will continue President Barack Obama's policy towards the region or re-pivot it away from the region, said Dr Mustafa.

"The Trump presidency is likely to reassess America's defence and security commitments around the world, including countries in South-east Asia such as Singapore," he said.

"Singapore is likely to want some form of assurance as to the current and future status of the defence policy and co-operation between the US and Singapore

"Moreover, Singapore is a staunch proponent for the US to be engaged in South-east Asia, particularly to serve as a balance of power with Chinese assertiveness in the region, not least with regard to the dispute in the South China Sea."

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S'poreans going to US

It may be a time of worry and anxiety for minorities, including Muslims, who live in the US or those from countries such as Singapore who plan to study or work in the US.

This is because of Mr Trump's caustic and virulent rhetoric against minorities during the electoral campaign, said Dr Mustafa.

"However, often times, what is said and promised in the heat of an electoral campaign does not get translated into official policy.

"It would be prudent to wait until the Trump administration lays out in detail what exactly will be its policy towards Muslims in particular and the Muslim world more generally," he said.

Read also: Muslim women afraid to wear hijab in public after Trump win

This article was first published on Nov 10, 2016.
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