Key Financial Trends of February 2024

In this month’s roundup of the latest economic, business, and financial news, Singapore announced its Budget for 2024, Japan and the UK enter a recession, the Malaysian Ringgit hits new lows, and the S&P 500 is at an all-time high.

ValueChampion Editorial Team

by ValueChampion Editorial Team on Feb 26, 2024

An aerial view of Singapore, including the CBD


Singapore Announces Budget for 2024

On 16 February 2024, Singapore announced its Budget for this financial year. Lawrence Wong, the Deputy Prime Minister and Minister for Finance, laid out a number of measures to mitigate the rising cost of living here. Additionally, the Budget also includes measures to support businesses as they grapple with equally rising costs.

There are four themes encompassing the various measures:

  • Support for Singaporeans

Many Singaporeans would be familiar with the benefits here. These include an additional round of CDC Vouchers in June 2024, a cash payout in August, and multiple rounds of CPF MediSave Account funding.

  • Investing in Our People

The benefits in this theme revolve around supporting mid-career professionals as they re-skill and upgrade themselves, helping lower-wage workers, and aiding ITE graduates pursuing a diploma via a new award.

  • Supporting Businesses and Driving Growth

Several large sums have been set aside for businesses. Among them, S$1.3 billion will go to the Enterprise Support Package, S$2 billion to the National Productivity Fund, and S$2 billion to the Financial Sector Development Fund.

  • Building a Resilient Future

The benefits here are broader in nature, including a S$100 million investment to fuel the Our SG Arts Plan roadmap, a new National Cybersecurity Command Centre, and a pilot Overseas Humanitarian Assistance Tax Deduction Scheme.

What This May Mean For You

Singapore may have avoided a recession in 2023, but the global macroeconomic and geopolitical situation is still uncertain. Additionally, Inflation rates around the world have been dropping, but the cost of living remains high. As DPM Wong stated in his Budget 2024 speech, the various support measures are meant to aid both businesses and households.

At an individual level, ensure you’re aware of what benefits you’re eligible for, especially once this Budget is finalised after 26 February’s parliamentary debate. There will be benefits doled out every month, starting from April’s enhanced U-Save GST Voucher (S$110–190) and Service and Conservancy Charges rebate (0.5–1 month).

Related: Singapore’s Economic Outlook for 2024

stocks chart recession
Source: Pexels

Japan and the United Kingdom Enter a Recession

On 15 February 2024, Japan released economic data highlighting it entered a recession in end-2023. From October to December 2023, its gross domestic product (GDP) dipped by 0.4%. This was more reassuring than July to September’s 3.3% drop, but two consecutive quarters of negative growth usually mean a nation is undergoing a technical recession.

As a result, Japan has ceded its place as the world’s third-largest economy to Germany. Furthermore, the Bank of Japan has not indicated when it will rework its current monetary policy and begin tightening interest rates. Lastly, private consumption, also known as consumer expenditure, remained weak throughout 2023.

The United Kingdom has entered a technical recession as well, with its GDP shrinking by 0.3% from October to December 2023. From July to September 2023, its GDP dropped by 0.1%. Jeremy Hunt, the UK’s Finance Minister, cited high inflation being the nation’s “single biggest barrier to growth”.

The UK managed to remain as the world’s sixth largest economy, recording an inflation rate of 4.2% as of January 2024, well below the recent peak of 9.6% in October 2022. Wages have been growing at a steady pace too, with the average weekly earnings of folks in the UK now at £669. For reference, this was £635 back in January 2022.

What This May Mean For You

Japan and the UK’s situation drives home how uncertain the global macroeconomic situation is, as stated above. Even the US has not hit its 2% inflation rate goal yet, with monthly figures clocking in at around 3% since June last year. Therefore, the US Federal Reserve (Fed) is not willing to commit to cutting interest rates right now.

As you might expect, other nations facing stubbornly high inflation are following the Fed’s lead, including Singapore. At an individual level, borrowing costs will remain elevated for a while. If you’ve taken on a home loan, refinancing it at this point may not be in your best interest. Applying for a personal loan for investment purposes may not be ideal either.

Related: 5 Causes of Inflation & How They Affect Forex Rates

skyline of Kuala Lumpur CBD in Malaysia
Source: Unsplash

Malaysian Ringgit Hits Record Low Against Singapore Dollar

This might’ve been a recurring theme throughout 2023 already, but the Malaysian Ringgit slumped to another record low against the Singapore Dollar on 20 February 2024. S$1 was briefly trading for RM3.57 from 20–21 February before pulling back slightly to RM3.55 once the weekend started.

To put this decline into perspective, S$1 equalled RM3.28 when 2023 started. Malaysia’s central bank, Bank Negara Malaysia, issued a statement to reassure the public that this does not reflect how the Malaysian economy will perform in the near future. It added that the ringgit was weak largely due to external factors and not because of the local economy.

However, Malaysia’s economic growth in 2023 was concerning nonetheless. It clocked a GDP increase of just 3.7%, missing its 4–5% target and being far below the 8.7% it achieved in 2022. Furthermore, Malaysia’s exports declined by 8% in 2023, with weak demand for its electronics, palm oil, and petroleum.

Across the causeway in Singapore, it was business as usual for money changers despite the news. Some speculated the response from Singaporeans was tepid because of expectations that the ringgit would weaken further. Given the recent history of the ringgit’s performance, it’s no surprise if people do indeed feel this way.

What This May Mean For You

Singaporeans and Malaysians working in Singapore have been benefitting from the consistently weakening ringgit. They get more value out of their money when they visit Malaysia to shop, dine, or seek out essential services (like vehicle servicing, for example). Travelling between Johor Bahru and Singapore is fairly quick and convenient, to boot.

However, if you’re investing in stocks or property in Malaysia, the increasingly weak ringgit would eat into your profits because of the foreign currency loss. Conversely, if you currently have a home in Malaysia and wish to spruce it up or intend to buy a house there, the weak ringgit would be a boon instead.

Related: Guide To Foreign Exchange Rates And International Remittance

New York Stock Exchange building banking trading
Source: Unsplash

S&P 500 Index Reaches All-Time High

On 22 February, the S&P 500 index achieved a new all-time high of 5,111.06 points. This rally was fuelled by technology corporation Nvidia reporting strong revenue growth and an encouraging outlook for 2024. The company is best known for its graphics cards, but a recent foray into artificial intelligence solutions has further boosted its attractiveness.

Nvidia led the charge for equities, and almost every other major sector in the S&P 500 followed. Only utilities posted a loss, at -0.8%. However, this is to be expected, given how the sector has been performing ever since the Fed hiked interest rates to combat inflation in March 2022.

What’s more, the Dow Jones Industrial Average (DJIA) also hit a record high of 39,282.28 points. This is a significant milestone as it’s the first time the DJIA has ever finished above the 39,000-point mark.

Lastly, the Nikkei 225 index joined the party too, posting an all-time high of 39,156.97 points. Although this might appear to be unexpected because of how Japan’s economy is performing, investors around the world have been redeploying their capital from Chinese and US stocks into Japanese equities.

What This May Mean For You

For many retail investors, deciding how and where to allocate your capital at this point in time is far from easy. The cost of living in most nations is still high, which puts a dent in one’s real income. Also, there’s always the fear that investing in the stock market when it’s at an all-time high would lead to reduced gains, or worse, losses down the road.

With that being said, if you didn’t engage in much or any panic selling throughout 2022, your portfolio would likely be in a much better place now. As for the investment capital you have on hand, it depends on your horizon. If you have years or decades before you need the cash, consider tuning out the noise and just sticking to a consistent investing schedule.

Related: How Do You Determine the Investment Horizon For Your Assets?


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Cover image source: Unsplash

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