Gold rush: Investors fleeing to safe havens after Trump’s tariff bombshell

SINGAPORE – Investors in Singapore are shifting more funds to defensive assets such as gold, cash, government bonds and real estate investment trusts (Reits) in response to US President Donald Trump’s latest tariff announcement, analysts say.

Mr Trump’s April 2 decision to impose at least 10 per cent tariffs on all exporters to the US – friends and foes alike – have pushed investors towards safer options amid market volatility.

Dr Chua Hak Bin, co-head of macro research at Maybank, noted that the shift away from riskier assets such as US tech stocks had already started in March, and will likely continue, given further downside risk to the US economy.

On the other hand, defensive assets, including gold, US Treasury bills and Singapore government bonds, have seen a rally, he said, while utilities and telco stocks – known for their resilience during economic downturns – are likely to draw more interest.

Gold rush

The most notable shift has been to gold, which hit a fresh record high of above US$3,160 an ounce on April 2.

Gold remains a key hedge against geopolitical and inflation risks, said Mr Hartmut Issel, head of Asia-Pacific equities and credit at UBS Global Wealth Management.

The yellow metal is expected to hit US$3,200 an ounce by the year end, but could trade even higher should the tariffs stay in place longer than expected, he added.

Ms Daphne Tan, director of business development at CMC Markets Singapore, has seen more queries and trading activities in gold and gold-related equities.

“Given that Trump’s new tariffs could invite retaliation tariffs, trade disruption and market volatility, the climate of global uncertainty is likely to persist for an indeterminable period – allowing gold an opportunity for sustained appreciation,” she noted.

UOB, which has raised the risk of a US recession from 25 per cent to 40 per cent, also vouched for gold, cash and government bonds.

“We continue to think gold is attractive due to its own supply and demand dynamics, and its role as a safe haven asset,” said Mr Anthony Raza, head of multi-asset strategy at UOB Asset Management.

Reits in demand

Singapore’s Reits may also be a beneficiary amid the market chaos, said Mr Thilan Wickramasinghe, head of Singapore equities research at Maybank Securities.

The US Federal Reserve may cut interest rates as a result of slower economic growth, which will lower the borrowing costs for Reits, making it cheaper for them to finance property acquisitions and increase revenue stream.

Citing CapitaLand Integrated Commercial Trust and Frasers Centrepoint Trust as examples, Mr Wickramasinghe said he likes domestic-oriented Reits in sub-sectors from office to retail, which are less likely to be exposed to the impact of export tariffs.

Mr Aaron Chwee, head of wealth advisory at OCBC Bank, saw a shift from equities to bonds. Yields on US Treasuries have fallen across the board, reflecting a typical flight to safety.

While the US dollar (USD) is traditionally seen as one of the safest places to park money in times of turmoil, it has lost its shine with the uncertainty over Mr Trump’s broader and larger reciprocal tariffs.

Instead, more funds have flown to other safe haven currencies such as the Swiss franc and the Japanese yen, both of which have strengthened against the US dollar, Mr Chwee said.

The tariff announcements have raised expectations for the Monetary Authority of Singapore to ease the country’s monetary policy at its next meeting in April, to counteract the tariffs’ impact on Singapore companies.

“A weaker SGD (Singdollar) could mean better returns for investors as asset valuations – from USD to SGD – will be higher,” Mr Chwee said, adding that the near-term pullbacks could provide investors with an opportunity to buy into high-quality assets such as large-cap blue chip companies.

While Singapore will be affected by a potential global slowdown, Mr Wickramasinghe believes that the Government has the fiscal firepower to provide stimulus packages, and may also bring some planned infrastructure spending forward.

But CGS International economic adviser Song Seng Wun believes it is early days yet. “We have not seen job losses in Singapore yet. We have to assess how severe the magnitude of the fallout will be, how severe the trade war will be, and for how long.”

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