Singapore's Straits Times Index (STI) plunged 7.46% on Monday (April 7), marking its steepest single-day decline since the 2008 global financial crisis, as markets reacted to U.S. President Donald Trump's sweeping tariff implementation. All 30 STI constituents closed in the red, erasing three weeks of gains as the index settled at 3,540.50 points amid fears of a global trade war.
The dramatic sell-off came as Trump's administration began collecting a unilateral 10% tariff on all imports from many countries on Saturday, with higher "reciprocal" tariff rates of 11% to 50% set to take effect on Wednesday, April 10.
Speaking to reporters aboard Air Force One, Trump showed little concern about market losses that have wiped out trillions of dollars in value globally, stating: "I don't want anything to go down. But sometimes you have to take medicine to fix something." The U.S. President further indicated that countries hoping to lower tariffs would have to "pay a lot of money on a yearly basis."
As panic selling gripped the market, Singapore's major banks and blue-chip companies responded by aggressively buying back their shares, signaling confidence in their long-term outlook despite short-term volatility.
DBS Group Holdings, which plunged 9.28% on Monday, led the charge by repurchasing 1 million shares for S$39.1 million at prices between S$36.31 and S$40.32 each. United Overseas Bank (UOB), down 6.29%, spent S$3.33 million to buy back 100,000 shares at prices ranging from S$29.68 to S$34.21.
Other major STI components also took advantage of the price drop:
Meanwhile, Kuok Khoon Hong of Wilmar International continued his regular share purchases, buying an additional 598,900 shares for S$3.33 million as Wilmar's stock price fell 5.81%.
For Singaporean investors heavily exposed to local bank stocks like DBS, OCBC, and UOB, the immediate impact has been painful. The three local banks, which form the backbone of many Singaporean investment portfolios, have collectively lost billions in market value.
However, market analysts point out that the banks' strong buy-back activity suggests management confidence in their fundamentals despite external pressures. DBS's willingness to deploy nearly S$40 million for share repurchases signals a belief that current prices represent a significant discount to intrinsic value.
While Singapore faces a 10% tariff from the U.S., this represents the lowest tier among Southeast Asian nations. By comparison, Vietnam faces 46% tariffs, making Singapore's exports relatively more competitive in the American market.
As a free trade partner with the U.S. since 2004, Singapore has legal grounds to seek exemption from these tariffs. Trade Minister Gan Kim Yong has expressed disappointment with the tariffs and indicated that Singapore will seek negotiations with the U.S.
"The 10% tariff is expected to have a 'significant impact' on Singapore's economy," Deputy Prime Minister Gan warned, signaling households and businesses to prepare for potential challenges ahead.
Despite the market turmoil, trade experts suggest Singapore could potentially benefit from "tariff arbitrage" situations. With countries like China facing tariffs exceeding 54% and the European Union at 20%, multinational companies may consider relocating operations to Singapore to take advantage of its relatively lower tariff rate, robust infrastructure, and stable business environment.
"As we get into tariff arbitrage situations, Singapore is likely to be a beneficiary," noted William Reinsch from the Centre for Strategic and International Studies (CSIS). "They should be aware of that and moving to take advantage of it."
Within ASEAN, Singapore could emerge as a regional gateway for the grouping's exports to the U.S., potentially boosting trade volumes and cementing its role as a regional manufacturing and logistics hub.
The market turbulence reflects deeper concerns about a potential global trade war and recession. JPMorgan economists now estimate the tariffs will result in full-year U.S. GDP declining by 0.3%, down from an earlier estimate of 1.3% growth, with unemployment potentially climbing to 5.3% from the current 4.2%.
This economic slowdown would invariably affect Singapore's export-oriented economy, which counts the U.S. as one of its largest trading partners. U.S. goods trade with Singapore totaled an estimated US$89.2 billion in 2024, with the U.S. enjoying a goods trade surplus of US$2.8 billion.
Prime Minister Lawrence Wong is scheduled to address Parliament at 1pm today (April 8) regarding the U.S. tariffs and their implications for Singapore. His statement will likely provide more clarity on the government's response strategy and potential support measures for affected sectors.
For investors, the significant buy-back activities by blue-chip companies suggest that corporate leaders see current valuations as attractive entry points for long-term investors. However, market volatility is expected to persist as the full impact of Trump's tariffs unfolds and countries negotiate potential exemptions or reductions.
As former U.S. Ambassador to Singapore Frank Lavin advised, Singapore should consider sending a Cabinet-level official to meet with the U.S. Commerce Secretary for a comprehensive review of the bilateral trade relationship. "An in-person meeting usually results in a lowering of temperature and a better understanding of issues," he noted.
Sources: Reuters, The Edge Singapore, The Straits Times
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