Singapore's recent adjustment of its 2025 GDP growth forecast to 0-2% reflects broader global developments, including changes in tariff policies and shifting market liquidity. These dynamics are impacting both public and private markets. While challenges abound, there are also emerging opportunities for asset managers and service providers willing to recalibrate their strategies and operating models to meet new market demands.
Liquidity in public and private markets: Crisis or opportunity?
The conventional narrative holds that the reintroduction-or further escalation-of tariffs will dampen market liquidity. Higher tariffs tend to disrupt supply chains and elevate operating costs, potentially constraining both public fund flows and private market deal-making. Historical instances have shown that similar tariff shocks have coincided with temporary pullbacks in liquidity, particularly in private credit and equity markets.
At the same time, there is an equally persuasive view that liquidity is not disappearing but evolving. As traditional investors become more cautious, new capital - from family offices, sovereign wealth funds, and strategic corporates - has increasingly sought opportunities in Asia's well-regulated markets like Singapore. During periods of market dislocation, investors may shift their allocations toward jurisdictions that offer superior legal frameworks and transparency.
In this transformed landscape, expert service providers are more crucial than ever, helping asset managers seize these niche opportunities by providing comprehensive support in fund structuring and cross-border operations.
The evolving playbook of fund managers
See also: Fed likely to keep rates unchanged, tariff volatility may not impact Chinese big tech
In response to a liquidity environment characterised by heightened costs and extended exit cycles - a dynamic exacerbated by recent interest rate hikes - many asset managers have adopted more cautious approaches. For example, private equity funds are holding on to dry powder longer, while venture capital strategies are being recalibrated with more rigorous underwriting.
However, several innovative strategies are emerging. Some funds are repositioning by investing in distressed assets, launching continuation vehicles, or exploring evergreen fund structures. While such strategies may seem risky initially, they can lead to enhanced long-term returns once market conditions stabilise.
Fund managers can also gain a competitive edge by harnessing cutting-edge technology - whether that's portfolio management with predictive analytics such as cash flow forecasting to manage liquidity, or AI-based deal origination.
See also: Trade war dampens port actiity says Fitch
Treasury market dislocations: Interpreting the signals
The US Treasury auctions on April 8 presented mixed signals: robust demand for 10-year and 30-year bonds contrasted sharply with tepid interest in 3-year issues. This divergence has been interpreted by some as indicative of liquidity stress and near-term policy uncertainty. However, it is also possible that such divergences reflect short-term market adjustments rather than a fundamental shift in investor sentiment.
Some analysts note that strong demand for longer-dated treasuries may suggest confidence in a potential rebound, especially if monetary policy eases later in the cycle. The selective weakness in short-dated instruments might be attributed to current supply dynamics and temporary investor caution regarding near-term fiscal policies.
Looking ahead: Embracing smart capital in a changing landscape
Singapore's reputation for regulatory clarity, robust legal infrastructure, and strategic geographic positioning remains a key magnet for capital-even amid a challenging global environment. While some market participants emphasise caution, alternative perspectives reveal that market dislocations can create space for smarter, more opportunistic investments.
Asset managers and institutional investors should consider the liquidity as evolving and shifting rather than evaporating. In this new reality, agile fund managers can adopt innovative strategies-whether by acquiring distressed assets, transitioning to evergreen funds, or pursuing creative credit solutions.
Ultimately, the transition from an era of easy capital to one demanding smart, disciplined capital allocation may help forge stronger and more resilient market players. As global uncertainty persists, those who embrace change, capitalise on emerging trends, and align with robust service partners are likely to be best positioned to thrive.
Neil Synnott is Chief Commercial Officer, Asia at IQ-EQ
