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Title: | AN ANALYSIS OF THE SINGAPORE BOND MARKET | Authors: | JANICE HU YUN MING | Issue Date: | 1996 | Citation: | JANICE HU YUN MING (1996). AN ANALYSIS OF THE SINGAPORE BOND MARKET. ScholarBank@NUS Repository. | Abstract: | Singapore already has a well developed banking system and a robust equity market. However, the Singapore Bond Market is still at its adolescent stage of development, and there has not been much coverage on this subject in the local research. This academic exercise sets out to provide an overview of the characteristics of local bonds and to analyse empirically the factors influencing bond pricing in Singapore. This is facilitated by the construction of the corporate bond price index and the government bond price indices for three different classes of maturities, using data extracted from SES Journals for the period January 1988 to December1994.Of even greater significance is the comparison of the returns of the following investment vehicles: stocks, corporate bonds, government bonds and fixed deposits, and in the process determining the relative attractiveness among them. The results of the empirical analysis indicate that returns of stocks were highly volatile but the rewards for bearing such high risks were more attractive than the returns for bonds over a long investment horizon. Corporate bond returns have been positive throughout the period of study, however its average returns were lower than that for stocks over the time period of the study. Bond returns managed to surpass stock returns for certain periods of time when stock market sentiments were adversely affected by world economic uncertainties. As for government bonds, its performance was generally poorer than stocks and corporate bonds, but it showed much less volatility. Furthermore, government bonds outshined fixed deposits as a safe avenue of investment for most part of the period under study. These empirical findings serve to rectify the general perception investors hold about bonds. Indeed, investing in bonds can provide additional opportunities for diversification and investment. Bonds can outperform equities during certain phases of the economic cycle, and can thus offer investors an opportunity to balance the equity risk with the safety of fixed-income instruments, providing an anchor against the winds of adversity. | URI: | https://scholarbank.nus.edu.sg/handle/10635/171404 |
Appears in Collections: | Bachelor's Theses |
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