MAS warned although, that there may very well be continued headwinds to the near-term prospects of the worldwide tech sector.
“First, a broader slowdown within the main economies might restrain end-demand for shopper and enterprise IT merchandise and due to this fact chip orders.”
Particularly, China – the world’s largest chip market – has posed a major drag on international chip gross sales because the third quarter of 2022.
MAS added that the tech warfare between the US and China stays a danger.
“From the preliminary concentrate on modern chips for superior applied sciences reminiscent of AI and supercomputing in October 2022, restrictions imposed by either side have since broadened to the tools and supplies to fabricate chips for a wider vary of strategic purposes reminiscent of 5G community infrastructure, smartphones and EVs.”
Consequently, “some home gamers may very well be adversely affected by disruptions to the provision of supplies or export markets if the present restrictions have been to broaden and change into extra stringent and extended than anticipated”, MAS stated.
The opposite business that would profit from an enchancment within the total international macro surroundings can be the monetary sector, MAS stated.
With inflation coming off its peak in Singapore and elsewhere, the native monetary sector is exhibiting early indicators of a choose up and should submit a modest restoration by 2024, the MAS stated.
The central financial institution stated that the precise, inflation-adjusted worth added by the monetary sector has been lacklustre up to now this yr.
“Amid the excessive rate of interest surroundings, loans to each residents and non-residents have continued to say no. Likewise, charges and fee revenue among the many banks, insurers and fund managers has been tepid.”
The central financial institution added that demand for comparatively riskier investments reminiscent of unit trusts and insurance coverage financial savings merchandise has fallen as investor preferences have shifted in the direction of decrease danger and decrease length – nearly money equal – merchandise, reminiscent of mounted deposits and treasury payments,” the MAS stated.
Whereas sluggish exterior demand and restrictive monetary situations will proceed to weigh on the monetary sector, price incomes might see an uptick in 2024 with rates of interest set to peak by the top of this yr, MAS stated.
Provided that Singapore makes use of its foreign money as its major financial coverage device, rates of interest right here comply with the lead of US charges, that are predicted to ease by the following two years.
Based mostly on the US Federal Reserve’s median projections as of September 2023, the Federal funds fee is projected to peak at 5.6 per cent at end-2023, earlier than moderating to five.1 per cent in 2024 and three.9 per cent in 2025.
“The moderation in rates of interest might induce shifts in asset allocation behaviour, with elevated rotations into bond and fairness funds from short-term money equal belongings. This can assist price incomes within the banks and fund administration segments,” the MAS stated.
