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How You Can Invest In The Technological Disruptions Occurring Worldwide

Yes! Singapore has a viable technology sector to invest into.

 

There’s no doubt that technology and innovation has disrupted the world we live in. In every industry from every angle, technology has been improving the lives of people by doing things in a better or more convenient manner.

Companies like Airbnb, TripAdvisor, Google, Whatsapp, Facebook, LinkedIn, Instagram, Dropbox and Tesla with multi-billion dollar valuations are some of the companies that have redefined the way people live, work and communicate. More compellingly, these companies came to the fore only in the last decade. And in the last couple of years, this trend has seen a steep rise with more technology companies sprouting up worldwide than ever before.

However, for every one of these “unicorn” companies that has thrived, there were hundreds more that died and were never mentioned again. Retail investors rarely have the stomach to make investments with such odds.

How You Can Safely Invest In Singapore’s Technology Sector

With retail investors seeking relatively safe investments, they will have to look elsewhere as technology companies, especially those at the incubation stage, tend to be riskier. One way they can go around this is to rely on stable companies that manufacture the technology hardware and semiconductors that these technology companies will require.

The Singapore Exchange (SGX) has 73 IT companies worth over $10 billion dollars mainly involved in technology hardware manufacturing. For all technologies, disruptive or otherwise, to be rolled-out, they still require some form of hardware to be manufactured – this is where the companies on SGX comes into play. Having already weathered a period of consolidation earlier in the 1990s when other major Asian economies opened in a big way, they represent the high quality firms that persisted. These companies should remain stable investments as long as current technologies persist and future disruptions continue to occur – which does seem the case.

In the last five years, this sector outperformed the Straits Times Index (STI) providing a return of 83% compared to STI’s 14%. This makes it the third best performing sector in Singapore for the year. In addition, it also gave dividends yielding 4.4% for the year.

For eager investors wondering where to start, the top 10 largest IT stocks can provide a focal point. These 10 largest stocks delivered a 98% return in the last five years, outperforming its peers in the same industry.

Singapore’s 10 Largest IT stocks (by market cap) Market cap (S$M) Company description
VENTURE CORPORATION LTD 2,642 Leading electronics manufacturing services (EMS) provider globally
SILVERLAKE AXIS LTD 1,692 One of the top 100 global technology providers to financial institutions
TPV TECHNOLOGY LTD 610 One of the world’s largest manufacturer of computer monitors
HI-P INT’L LTD 390 Leading global technology component supplier and manufacturer
GP INDUSTRIES LTD 276 GP Batteries the no. 1 battery manufacturing company in Asia excl. Japan
NERATELCOMMUNICATIONS LTD 268 Leading telecommunications solutions provider
UMS HOLDINGS LTD 266 Leading front-end precision component provider for semiconductor industry
CHUAN HUP HOLDINGS LTD 242 Diversified company with an electronics manufacturing services segment (74% of revenue)
IFAST CORPORATION LTD 227 One of the first internet-based investment products distribution platform
CSE GLOBAL LTD 221 International technology solutions provider across many industries

 

Singapore Is A Destination For Global Technology Companies

With the Singapore government championing the country’s push to become a smart nation by pouring up to $14 billion into the programme, the nation will continue to be a long-term destination for global technology companies as they seek to come to the country to fulfil this programme and ride on the tech wave.

The various government agencies and industry associations are also backing the country’s drive to become the tech-hub of Asia. This can be witnessed by the growing number of start-up funding deals as well as this week’s fintech festival – a weeklong series of events that makes it the world’s largest fintech event according to the Straits Times. Jointly organised by the Monetary Authority of Singapore (MAS) and The Association of Banks in Singapore (ABS), the fintech festival will further boost the country’s position as a technological hub. During this festival, Lattice80, the world’s largest fintech hub was also launched.

While Singapore has also been courted by technology giants such as Facebook, Google, Airbnb and Twitter to map out their Asia Pacific operations, our local technology scene at Block 71 – dubbed by The Economist as the world’s most tightly packed entrepreneurial eco-system – has quietly been producing technological companies ready to conquer the new world.

What all this means is that Singapore will continue to be a hot-bed for technological opportunities. And the companies listed on the SGX, present and future as the industry grows, will offer viable investment prospects.

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