Global economic forces have a significant impact on Singapore's economy through push and pull factors. When economies struggle, asset values decline and people are endangered, prompting policymakers to intervene to boost asset prices and stimulate growth. For instance, quantitative easing by the US Federal Reserve pushes up inflation in Singapore by increasing food and energy costs. China's massive credit expansion following its near-crisis in 2009 drove up global commodity prices and Singapore property values as Chinese investors sought properties abroad. While Singapore tries to manage external influences, there is only so much it can do, and wise investors will accurately predict and profit from actions by policymakers to reflate economies through new credit.

1. THE GLOBAL
ECONOMIC FORCES:
WHAT INVESTORS
MUST KNOW?
Part 2: Understanding The Push And Pull
Factors That Will Affect Singapore

2. When the economy
starts to sink, the
stocks, bonds,
commodities and real
estate lose value and
the seven billion people
become endangered.

3. If the raft really goes
under, government
policymakers around the
world are terrified this
will turn into a replay of
the Great Depression.

4. So, they respond by
pushing the value of these
assets back up whenever
they become too
weak. When they do, raft
reflates, all the assets
increase in value and the
immediate danger to the
world’s seven billion people
diminishes.

5. This policy action has
profoundly impacted
Singapore’s economy.

6. For instance, when the
Federal Reserve, the US
central bank, prints money
and buys assets (an
operation known as
Quantitative Easing), it
affects Singapore in a
number of ways, but we most
keenly feel the pinch when it
causes inflation in Singapore
to soar by pushing up the
cost of food and energy.

7. In China, it’s economy
very nearly collapsed
into crisis in 2009.

8. Chinese policymakers
responded by allowing
the total amount of
bank loans in that
country to expand by
60% in just two years.

9. That extraordinary
expansion of credit not
only pushed up global
commodity prices, it also
drove up property prices
in Singapore as foreign
investors in China parked
their money here in Real
Estate; driving up
demand and causing
property prices to rise
sharply.

10. While the local
government has taken
steps to control the
impact of the global
economy on Singapore,
there is only so much
they can do.

11. We are in a state of
extreme disequilibrium
and this crisis is far from
over.

12. Yet, fortunes will be
made by the wise
investors here who can
accurately judge when
government
policymakers will reflate
the raft with new credit
and be prepared to
respond accordingly.

13. Success Resources Pte Ltd
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