Asian markets began the week on a shaky note, but the story isn’t uniform across the region. While most stocks slipped into the red as lingering uncertainty around the Middle East conflict dragged down investor sentiment, Singapore is bucking the trend with its comparitively better position and its markets hovering near record highs despite the global unease. This comes after US-Iran peace talks failed US-Iran talks and Washington announced blocking the Strait of Hormuz.Across Asia, investor sentiment took a hit as tensions escalated. South Korea’s Kospi dropped nearly 2% in early trade before recovering some ground, while Japan’s Nikkei was down 0.3%. Around 8:45 am IST, Hong Kong’s Hang Seng was down over 317 points or 1.22% to 25,576. South Korea’s Kospi followed with a loss of 1.14% to 5,792. Japan’s Nikkei also traded in red, tumbling 1% to 56,357. Shanghai trimmed 8 points to 3,978 while Shenzhen traded in green with a marginal rise of 0.2%.Singapore also traded in the negative territory, down 0.3% but showed a relatively better journey since the conflict began, moving in the range of 4,995 to 4,970.The geopolitical strain also sent oil prices sharply higher. West Texas Intermediate (WTI) for May delivery surged around eight per cent to $104.50 a barrel, while Brent crude for June delivery climbed seven per cent to $102, pushing prices beyond the $100 mark.This marks a turnaround from last week, when oil had eased and equities rallied after US President Donald Trump agreed to a two-week ceasefire. However, the truce quickly appeared fragile as Israel continued strikes in Lebanon and the Strait of Hormuz remained effectively closed.
Singapore rides on safe haven status
In contrast to the broader regional weakness, Singapore’s markets have shown notable resilience. Equities have declined the least in Asia since the conflict began and are now close to reclaiming record highs, supported in part by the outperformance of the Singapore dollar against its Southeast Asian peers.The Straits Times Index has remained largely steady since the start of the conflict, in contrast to a 4.9% decline in MSCI’s broader Asian gauge, with regional stocks still about 5% short of recovering their losses.According to Bloomberg, domestic factors have also played a role. Singapore’s Equity Market Development Programme, introduced last year, is expected to channel billions of dollars into the market, supporting valuations and investor interest. Additionally, the composition of its benchmark index, where high dividend-paying companies such as DBS Group Holdings and Oversea-Chinese Banking Corp. account for more than 40%, has strengthened its appeal during uncertain times.“The relative strength of the Singapore dollar offers safe-haven status” to local equities, said Daniel Lau, a fund manager at Eastspring Investments in Singapore. The EQDP efforts offer valuation support amid the global uncertainty as well, he told Bloomberg.Meanwhile, efforts to stabilise the situation faltered over the weekend, with the United States and Iran failing to reach an agreement. President Trump then said the US would begin a full naval blockade of the crucial waterway, raising the prospect of further market volatility.The conflict, which began on February 28, has continued to ripple through global markets. Following joint strikes by the US and Israel on Iran, Tehran has disrupted the Strait of Hormuz, a key global energy route that carries nearly 20% of the world’s fuel.
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In your opinion, which energy price trend will influence investor sentiment more?
As tensions in the Middle East continue to intensify, investors remain wary, with developments around the Strait of Hormuz and the broader conflict continuing to shape movements across commodities, currencies and equity markets.
