Global investors optimistic about 2025 investment climate in Singapore

Investors worldwide are relatively optimistic about the development of the Singaporean economy over the next 12 months, although they fear the impacts of a number of challenges such as macroeconomic volatility, cyber risks and geopolitical conflicts. That is according to the Global Investor Survey from PwC.

The survey of around 350 investors from 20+ countries worldwide found that 49% of respondents investing in Singapore expect the domestic economy to grow over the next 12 months.

The investors are however weary of several risks that may impact their investments. They rank macroeconomic volatility as the top concern at 51%, followed by cyber risks (49%) and geopolitical conflicts (45%). In contrast, globally, investors’ greatest concerns are cyber risks (36%) and geopolitical conflict (36%), both of which are largely unchanged over the last two years.

With these risks remaining top of mind for investors, almost nine in ten (88%) agree that the ability of a company to manage through a crisis is an important factor in their investment decision-making. 60% of respondents who invest in Singapore believe it is also very or extremely important that companies re-think their business models in response to supply chain instability.

When making their investment decisions, PwC’s report uncovered that investors are increasingly looking beyond financials. On top of looking at financial statements and note disclosures, investors look at materiality assessment disclosures (65%), third-party data sources (60%), investor-focused communications (58%), and ratings and scores from credit ratings agency (58%).

Patrick Yeo, Deputy Markets Leader at PwC in Singapore, said: “Investors are increasingly looking beyond financial information and getting information from multiple sources. Transparent and timely communication by management across these diverse information sources allowing investors to triangulate the information is vital for building trust with investors in Singapore’s competitive investment landscape.”

ESG

The report further found that investors continue to prioritise action on the impact of climate. 29% of respondents who invest in Singapore expect that the companies they invest in will be highly or extremely exposed to threats from climate change within the next 12 months, up eight points from 2022, but down two points from 2023.

71% of respondents who invest in Singapore (75% globally) agreed that they would moderately or significantly increase their investment in companies that are taking a range of climate-related actions, with the greatest support for taking action to innovating products and services that enable customers to adapt and/or mitigate the impacts for climate change (80%) and build sustainable supply chains by working with suppliers and communities (78%).

“It is not surprising that investors are continuing to prioritise action on climate as it has real bearing on business whether through physical or transition risks or keeping an eye on tangible opportunities,” commented Fang Eu-Lin, Sustainability and Climate Change Leader at PwC in Singapore.

However, challenges remain – 54% of respondents who invest in Singapore agreed to a large or very large extent that corporate reporting about a company’s sustainability performance contains unsupported claims – marking little change over the past two years. Not surprisingly, over seven in 10 surveyed are demanding a level of detail in assurance reports on sustainability information that is comparable to that of financial audits.

And investments in AI

Notably, a large chunk of investors told the researchers that they are prioritising companies that lead in artificial intelligence (AI), with 80% of investors stating that they believe AI can increase revenues and profitability.

“Investors investing into Singapore no longer see AI as a ‘nice to have’ showpiece but expect to see AI investments translate into tangible outcomes, driving up productivity leading to higher revenue and profitability,” said Yeo.