Amidst economic uncertainties, Singapore stocks have demonstrated resilience with solid earnings, compelling value propositions, and attractive dividends. Today, we’ll explore the advantages of investing in the Singapore stock market and give you a quick guide to help you get started. Let's dive in!
The Benefits of Investing in Singapore Stocks 1. Stable and high-yield dividends
Investing in Singapore stocks offers you the potential for stable returns and high-yield dividends. While the Singapore market may not be as dynamic as the US stock market with large tech giants, like Microsoft and Nasdaq, Singapore's stock market provides investors with consistent returns and a relatively safe investment environment.
Many Singapore-listed companies have a culture of paying regular dividends to shareholders. For instance, Netlink NBN Trust, Singapore’s only fibre optic cable provider, has steadily increased its dividend per share from 3.24 Singapore cents in 2018 to 5.3 Singapore cents in 2024.
If you're a risk-averse investor seeking stable and reliable returns, the Singapore stock market is a good option to maintain a portfolio that can withstand market fluctuations.
2. Singapore has a resilient economy
Singapore's economy has consistently demonstrated remarkable stability and growth with a low inflation rate. The city-state has been considered one of the “Newly Industrialized Countries’” since 1979. Singapore’s economy was the first to recover from the COVID-19 pandemic, among other countries in the Southeast Asia region.
Despite the economic disruptions from the COVID-19 pandemic, Singapore’s economy bounced back quickly, growing by 1.2 percent in 2023 with the growth forecast maintained at 1 percent to 3 percent. Additionally, the Inflation Rate in Singapore decreased to 2.70 percent in March from 3.40 percent in February 2024.
These are considered favourable conditions to investors. With its quick recovery from economic disruptions and low inflation rate, investing in the Singapore market could provide you with steady returns and helps safeguard your portfolio against market volatility.
3. Diverse and investment-friendly environment
Singapore is known for its highly developed and diversified economy, serving as a global hub for “IMD World Competitiveness Ranking 2023”, Singapore ranks fourth among the most competitive countries in the world. In 2023, the city-state was home to 4,200 regional headquarters of multinational companies.
The stable political system, world-class infrastructure, excellent connection to global trade, and top-rated education system are the foundations of the country's investment climate.
Singapore provides a secure and promising environment for investors, so your investments will be supported by a stable and thriving economy.
4. No capital gains tax in Singapore
Another perk of investing in the Singapore stock market is the absence of capital gains tax. This means that both your dividends and capital gains are not taxed, unlike in markets like the US, where a 30% withholding tax on dividends is common. As an investor, this means you’ll get to keep all your earnings.
Additionally, Singapore offers several other tax incentives including:
Zero Dividend Tax: Singapore has no withholding tax on dividends. (Though some other types of payments such as royalties, some types of interest, commissions and fees can be subject to withholding tax.)
Zero Estate/Inheritance Tax: No tax is imposed on the transfer of assets from a deceased person to their beneficiaries, ensuring smooth wealth transfer with minimal financial burdens.
Tax Transparency for REITs: REITs that distribute at least 90% of their taxable income enjoy tax transparency, and individual investors receive these distributions tax-free.
5. Singapore has a well-established REITs Market
Speaking of REITs, Singapore has a vibrant REIT market, which is the second largest in Asia. It offers investors access to income-generating properties like commercial buildings, retail malls, and industrial estates.
As of December 2023, the aggregate market capitalization, or the market value of the outstanding shares of stocks of all REITs, amounted to 68.96 billion U.S. dollars. Investing in Singapore REITs gives exposure to the country’s valuable real estate, which has appreciated steadily over the past five decades. These REITs give stable returns and will let you spread your investments across local and global markets.
What you need to know before investing in Singapore Stocks
There are two key components required to start stock investing in Singapore. You will need to set up a brokerage account and a Central Depository (CDP) account.
A brokerage account allows you to buy and sell stocks, bonds, ETFs, and other securities. It is held by a financial institution or brokerage firm and acts as a middleman between you and the stock exchanges. You can place trades, monitor your investments, and manage your portfolio through this account.
A CDP account is operated by SGX, which holds all your shares on the open market safely. All investors are required to open a CDP account to store Singapore securities. It serves as a security for all of your stocks.
To open a CDP account, you must prepare a copy of your IC, a recent bank statement, and an income statement ready to be submitted.
The difference between a CDP-linked and a nominee account
When you open a brokerage account in Singapore, you'll also have to choose between linking it to a CDP account or a nominee account.
A nominee account is an account where your brokerage firm holds your shares on your behalf. The shares are registered under the brokerage’s name, and the brokerage acts as a nominee for your investments. You’ll still own the shares and will receive dividends; however, you may not have the same voting rights as with a CDP-linked account. The upside here is that nominee accounts offer you lower fees and provide a wider range of global market options. The type of account you decide to use really depends on your investment style. Remember to do your research, as some brokers might require a minimum deposit before you can execute trades.
If you’re looking for a well-established brokerage platform with low fees to minimize costs and maximize your investment returns, then look no further than CGSI. CGSI has been a trusted broker since 1979. The investment platform stands out with its low fees and zero deposit feature. They offer low commission rates and waive fees for CDP Sub-Account maintenance and SGX dividend handling. With CGSI, you can buy, sell, and trade Singapore stocks, invest in ETFs, bonds, options, and futures on their platform. Account opening with CGSI is free, and you won’t require any minimum deposit to start trading.
CGSI offers you the flexibility to select more than one margin product.
On CGSI, select your account type. Make sure to fill in your personal details correctly, and remember to use your personal email (not your work email!) for registration. After which, you’ll go through the standard e-KYC verification. Once your application has been approved, you’ll receive an email confirmation with your account details attached. You can then fund your account to begin trading!
For further visual guidance, you can check out the tutorial by CGSI CIMB.
Conclusion
Investing in the Singapore stock market from Malaysia could potentially bring you plenty of successful investment opportunities. While the Singapore stock market has shown excellent track records and robust investment opportunities, like all investments, it’s important to remember that they carry risks. As always, we urge you to do your own research or seek professional guidance before making any investment decisions.
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