In his 1932 dystopian novel Brave New World, English writer Aldous Huxley imagined the year 2540, when citizens are ranked using an intelligence-based social hierarchy. In a future characterised by technological inequality, genetically bred humans are socially indoctrinated and pharmaceutically anesthetised to uphold an authoritarian ruling order passively — at the cost of freedom, humanity and the loss of one’s soul.
Written under the looming shadow of Fascism in Europe, we are today perhaps a lot closer to what Huxley described nearly a century ago. Five centuries before the novel is set, we already see the use of advanced artificial intelligence (AI) applications to augment the “dark” arts of advertising and persuasion. Gaming addiction is being promoted, mass entertainment propagated and dissociation from the real world through the metaverse with online avatars seems to be the growing norm.
With AI winners Nvidia, Alphabet or even MicroStrategy the subject of breathless headlines, the world in 2024 was practically the oyster of the digital and crypto bros, set to gain additional swagger when Donald Trump takes office in a few days.
That is assuming that we do not wipe ourselves out first, as there are no common standards today that formally require a human kill switch for AI models, drones or nuclear war simulations if machines go rogue. Or when the people entrusted with nuclear launch codes from Moscow to Washington do not make an irrational decision that triggers a chain reaction that ends in a nuclear holocaust.
This lack of common ethical standards applied to AI has worried the Europeans so much they are attempting to set up some global standards. The American Wild West and the Silicon Valley friends of Trump would undoubtedly rail against regulation of any sort as curbs to creative ingenuity and the daring of venture capitalists, private equity and angels who had dared to invest at an early stage.
Warren Buffett, for instance, invested in China car maker BYD over a decade ago when it was still unknown, although it outsells Tesla today. The curious thing is that even though Tesla corrected almost 20% to US$380 ($520.60) per share following the news of the sales miss despite cutting prices in late December, its market cap of US$1.3 trillion is still ahead of BYD’s US$100 billion.
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This dystopian future predicted by other authors of the 20th century also holds in other areas of technological advances. Stem cell treatments are available to the very wealthy with access. In this future, those rich enough to afford it might live forever while the rest of the world has to struggle for clean air, water, food and climate security. Still, there exists a deep pool of capital, at least in the US, to invest in drug discovery where one winning bet can offset 19 other failed ones.
Paradise Lost
In Singapore, regrettably, much commentary is still fixated on how our market regulators must ensure that companies succeed — including those riskier growth names on the Catalist. Ironically, our retail investors have joined our sovereign wealth funds to hop on the wild US markets with significantly less investor protection, where Elon Musk and Roaring Kitty’s tweets move markets.
It is not the job of regulators to make sure a listed business model succeeds or take action if it fails to grow quickly enough. Sometimes, it is because of competitive pressures or slow take-up because of industry-specific dynamics, such as in the case of 2024’s first IPO, Singapore Institute of Advanced Medicine Holdings.
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Instead, it is the investors’ job to make decisions based on fairly disclosed information. If we choose well instead of lamenting about every possible authority we could think of to blame or point simply to corporate governance issues as the bane of all things, one could have hit the jackpots locally, too. Wee Hur Holdings in 2024 made 120%, Beng Kuang Marine 260% and Oiltek International surged 380% — to name three companies listed on the Singapore Exchange that had outperformed crypto right in our backyard.
As Chew On This had elaborated in the middle of last year, just before the Capital Markets Committee’s work kicked off, the structural problem in Singapore is the lack of sustainable public and private capital that recycles hard-earned savings generated in this economy back into the market. Without this, the $4 trillion of capital here cannot become the cornerstone for IPOs, leading to a drought.
Yes, we do, of course, want big listings, regional and global champions listed here (Sea is next in size market cap wise to DBS Group Holdings but listed on NYSE). Still, our view is solving for and institutionalising demand and not just implementing a bunch of supply-side rules and regulatory changes will solve the chicken and egg problems in our local market.
The Straits Times Index (STI) gained 18% last year to be near its all-time high, but it was the index component stocks that had a stellar year, as we postulated in this column at the beginning of last year. Demand should also be channelled to mid- and small-caps, enabling our SMEs to get that growth capital and valuations en route to building regional and even global leadership. Should that become a reality this year, it will indeed be 17th-century poet John Milton’s epic poem Paradise Regained.
Four Horsemen
While 2024 ended without the customary window dressing in most markets as the time was ripe for some profit-taking and with equity portfolios from the US to Singapore benchmarks rising in the high teens, 2025 did start with a mild Capricorn effect for most markets, except for China. It tanked 3% on the first day of trading. I bought some ETF and then sold the next day on a rebound.
I got lucky, and if only I had known, I would have traded more. I, too, bought some STI ETF in the window dressing period in late December and took a small, almost 2.5% profit by Jan 3. The STI, led by our three local banks from day one into day two after a stellar 2024, sputtered close to its all-time high, and I chose to take the bird in hand first.
Last year, we called for the STI to break out of its 3,100–3,400 range, which it did. This year, despite consensus cautiousness (“We never see the STI do two double-digit gains in two years”), I still think that there is room to break the all-time high meaningfully, but all good horses have to rest. It may come about in the second half of this year.
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So, there is room to buy the dips. Much like what I am happy to do for China ETFs. The US is 70% of the MSCI World and represents 26% of global GDP. China represents 20% of the global GDP and is less than 3% of the MSCI world, with Western investors largely underweight for geopolitical reasons. After last October’s fast and furious rally fizzled out just as rapidly, the indices settled roughly one-third to half of the rally.
For long-term investors, the downside is less than the upside, even if this horse will be a distance runner. With patience, having sold into the October rally, I am gradually looking to add some allocation back on dips, but if there is 2.5% in a day, there is no harm in banking it in first.
Unlike in 2023, when Japan was the compelling dark horse we called, which continued its ride through 2024, there are very few straight bets at the races on the macro front, with all the political and economic uncertainty following Trump’s Jan 20 inauguration.
Japanese equities may have fewer legs to run up and are likely to hold steady with the yen recovering in line with its economic output and clout gradually. It is more of a currency play, so perhaps the horse to bet on is USDJPY. A negative carry because of the wide interest rate gap may narrow if the US Federal Reserve cuts and the Bank of Japan raises, albeit slowly. It is also the ultimate risk-off hedge as the yen strengthens when carry trades unwind, just like last summer when USDJPY fell from 160 to 140. At 157 now, with impending Bank of Japan intervention, it may be a good hedge in this year of investing dangerously.
The US looks very unpredictable. Already President-elect Trump’s Silicon Valley bros and his Doge (Department of Government Efficiency) advisors Elon Musk and Vivek Ramaswamy had an open spat with the Maga base — over H-1B visas and immigration to keep America competitive, or manage to mediocrity with protections and tariffs. More specifically, with two years of 20% gains in US equity indices back-to-back, which I had already missed, I will not be the greater fool to carry it down as some discovered in Oct 2021 before up to 70% falls hit some stocks and indices in 2022.
I am hopeful for a soft landing in the US and not a hard one; I am also hoping there will not be an apocalypse in 2025, no thanks to the ever-widening conflict in the Middle East or Europe via Ukraine. For investing, I will stay much closer to home this year. It will be an evolving, brave new world shaped by technological advances, deglobalisation and strongman leaders from India to America, heightening the opportunities and risks of investing globally. But in Singapore, I am convinced there is significant alpha from undervalued market segments, and even among some big blue chips that remain to be discovered without the slippery slopes of snakes and ladders in global geopolitics ahead.
For those sceptical of this STI horse repeating its 2024 feat in 2025 — the US did it in 2023 and 2024 — I remain hopeful that this SG60 year, where Singapore completes one full 60-year Chinese zodiac cycle, could be where we have a reset of our local markets, and not just a general election somewhere in between. With the messiness and uncertainty in the developed markets, just a trickle-back in allocation may be the perfect birthday gift for our nation’s markets. Already, I am reaping its dividends.
Chew Sutat retired from Singapore Exchange after 14 years as a member of its executive management team. During his watch, the exchange transformed from an Asian gateway into a global multi-asset exchange and he was awarded FOW’s Lifetime Achievement Award. He serves as chairman of the Community Chest Singapore
