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Will Singapore ETF Survive the Coronavirus Onslaught?

Sweta Jaiswal, FRM

Coronavirus, officially known as Covid-19, has resulted in a fatality count of 1,350 people and infected more than 60,000, globally. As of now, 25 countries have confirmed coronavirus cases and the death toll outside mainland China currently stands at 2.  Meanwhile, reports of new cases are flowing in from different parts of the world, with London recently reporting its first case.

Also, there was a spike in the number of confirmed cases from the ground zero of the coronavirus outbreak Hubei province to 14,840 on Feb 12  from the 2,015 new cases reported a day earlier. The numbers rose post China applied a new clinical method for diagnosis. The market participants are now  increasingly worried about the impact this might have on financial markets and majorly on China’s economy as it makes up for about 17% of global GDP. Estimates on the impact of the virus on the global economy have been issued by leading companies like Moody’s Analytics and Barclays,  projecting a 0.3% drop in 2020 (read: ETF Strategies to Mark as Virus Scare May Hit Global Growth).

The coronavirus eruption, which has already crossed the fatality of the 2002-2003 SARS pandemic, is expected to slow down Singapore’s economic growth in 2020. The city state is already expecting tourist arrivals and spending to fall 30% in the year. In this regard, Minister for National Development, Lawrence Wong said that, “we know there is economic impact. Already the specific sectors are feeling it – tourism, hospitality – but beyond these specific sectors, we think the broader knock on impact can be quite severe as well.”  Also, the estimate for Singapore's 2020 real GDP has been reduced to 0.9% from 1.4%, per DBS Group Research.

Meanwhile, the organizer of Singapore's IT Show, Food & Beverage Fair and BuildTech Asia/Cargonow, has postponed the three events until further notice due to the growing seriousness of the coronavirus outbreak. In fact, the IT Show 2020 happens to be one of the largest consumer electronics exhibitions in the Republic. It is being believed that Singapore’s high virus-cases count could be a result of its open borders, interconnectedness along with a pro-active approach to testing (read: 5 ETFs to Protect Your Portfolio From Coronavirus Threat).

Accordingly, in order to combat the eruption, Singapore’s government has announced to inject a “strong” economic package as part of its national budget. During the SARS pandemic as well, the government of Singapore had rolled out a relief package of around S$230 million (US$166 million). Also, the government has raised its national disease response level to the second-highest level — orange.

Against this backdrop let’s take a look at the following ETF:

iShares MSCI Singapore ETF EWS

The fund provides exposure to large and mid-sized companies in Singapore and tracks the MSCI Singapore 25/50 Index. It holds a basket of 25 stocks and charges a fee of 50 basis points. It has an AUM of $538.5 million. The fund trades in daily average volumes of about 630,000 shares. It has a Zacks Rank #3 (Hold) with a Low risk outlook. The fund has lost 3.7% in the year-to-date period and 0.2% in the past year.

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iShares MSCI Singapore ETF (EWS): ETF Research Reports
 
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