Singapore's MAS Concerned About Global Politics

The Monetary Authority of Singapore (MAS) released Financial Stability Review 2016, in which it warned against anti-globalization saying that political constraints together with rise of anti-globalization sentiment could impede effective policy-making. The Review further assessed potential risks within global financial market, property industry in Singapore and other related subjects.

Financial Stability Review (FSR)

The review provides regular assessments of risks and vulnerabilities arising from developments in Singapore and the global economy. MAS also assesses the implications for the soundness and stability of Singapore’s financial system.

Section 1 of the FSR provides a discussion of the risks in the external environment. This is followed by an analysis of the Singapore financial sector in Section 2. Finally, a review of the corporate and household sectors is provided in Sections 3 and 4 respectively.

Political Uncertainty

MAS has warned that following the UK’s vote to leave the EU, political uncertainty in Europe has increased, with the rise of Euroscepticism and stronger support for populist parties. In this regard, Financial market volatility could spike in the run-up to and the wake of upcoming elections in France and Germany in 2017. Recent developments in G3 politics have highlighted wider concerns over the rise of anti-globalization sentiment and policymakers "need to balance doing what makes the most economic sense against what is politically palatable" and need to prepare for possible shocks from the political events.

China, Property and Dollar

In China, efforts to stabilize the economy have yielded results, however, disruptions to the Chinese economy could spill over to Singapore, MAS warned referring to China's recent rise in debt levels. MAS also warned the property investors in Singapore of the prospect of void periods and declining rents by the country’s Monetary Authority. The report also covered a rise in US interest rates and possible increase in US dollar funding costs.

Sources: MAS - FSR

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