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Singapore Blue Chip Winners From US Tapering

Uncle_Sam_(pointing_finger)America has finally started to wind down its money-printing activities. It is a sign that the US economy is finally returning to normal. Some might say that the Federal Reserve should have done this a lot earlier. But better to be late than not at all.

The decision by the Federal Reserve to inject $75 billion rather than $85 billion a month into the US economy was received well by the markets. That should not have come as a surprise. After all, pumping $75 billion a month into the US economy still amounts to $900 billion a year, which is not an insignificant sum of money.

However, let us not forget what the action of the US Federal Reserve actually means. It means that the growth in the US economy, which is still the largest economy in the world, is picking up. Last month’s data suggests that the US economy grew at an annual rate of 2.8% in the third quarter of 2013.

A pickup in the US economy bodes well for many Singapore companies with direct exposure to America. For instance defence contractor Singapore Technologies Engineering (SGX: S63) generated around a quarter of its revenues from North America last year.

Meanwhile, real estate company City Developments (SGX: C09) is sitting on over a billion dollars of assets in the US. Its exposure to America accounted for around 13% of total revenues last year. Elsewhere, a revival in the US economy could bode well for Singapore Airlines (SGX: C6L), which generates around 6% of its revenues from the Americas.

Apart from many blue chips that have a direct exposure to the US economy, a pickup in America could have a positive knock-on effect on many smaller companies that rely, perhaps indirectly, on exports to the US for growth.

It is often said that when America sneezes, the world catches a cold. And we all did exactly that. But now that America is recovering, it is time to go hunting for stock market bargains if you haven’t already done so.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.