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As the US-China trade war continues, local businesses, especially SMEs in Singapore, are expected to be affected the most.
Hong Leong Finance president Ang Tang Chor believes that local companies will probably have a profit slowdown this year due to the US-China trade war, in addition to the property measures imposed last July, reported The Business Times.
“SMEs (small and medium-sized enterprises) in Singapore will be hit harder than others, especially those at the lower end of the value chain,” he said.
This is seen as bad news for Hong Leong Finance, where SMEs comprise around 70 percent of its loan books.
It is also heavily collateralised in relation to real estate, which comprises 80 percent of the company’s portfolio.
Minor property developers and construction players, on the other hand, are unlucky as they have been affected by both the trade war and the cooling measures.
With business sentiment still wary, he observed that SME clients are now looking for cheaper interest rates on loans because of the trade war’s impact.
“As they are affected on the business side, they have to control expenses and are now becoming more careful in buying capital equipment,” he noted.
“In the past, they would change equipment every five years, now they try to stretch it out more. We are seeing more of this happening in the market.”
Despite these looming setbacks, the impact on the financial institution is predicted to be minimal as its property loan portfolio is seen as diversified, including industrial, commercial, residential and hotels, among others.
As for other sectors of the Singaporean economy, Ang expects domestic industries to be hit next as citizens tighten their purses in anticipation of an economic slowdown.
However, he believes that some industries such as warehousing, storage, transportation and logistics, could benefit.
“As companies move part of their supply chain to this part of the world, SMEs can capitalise on this.”
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
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