4 Types Of Recession-proof Businesses In Singapore To Invest In
A list of sectors that you can look into to diversify your holdings in case of a recession.
Thanks to a pick up in global manufacturing activity, the Singapore economy escaped a recession early this year. However concerns remain as geopolitical tensions become an increasing threat to economic productivity. Things are pretty uncertain at the moment and should there be an armed conflict, it could possibly trigger panic in the economy.
So what does this mean for us as investors? Should we liquidate our positions and wait? Or should we diversify and focus on downside protection by buying recession-proof businesses? Here, I’ve compiled a list of sectors that you can look into to diversify your portfolio.
Auto Inspection and Maintenance
People are less likely to buy a new car during a recession. They would prefer to maintain or renew existing vehicular ownership licenses as a cost saving alternative. An example of a business to invest in will be Vicom, due to its monopoly in automobile inspection services. VICOM will be less likely to be affected by a recession.
Healthcare Providers and Services
Singapore is well-known as being a leader in providing quality healthcare services in South East Asia. People from all over the region visit our hospitals to seek high-quality medical services. There are several healthcare operators listed on Singapore Exchange's (SGX), and one of them is Raffles Medical Group, which operates hospitals, medical clinics and investment holdings.
Food and Staples Retailing
I would focus on businesses that own large grocery chains or supermarkets that are ideally low-cost operators. In a tightening economy, people would rather shop at discount grocers or supermarkets. People tend to cut down on luxury spending for food and basic necessities. Sheng Siong Group operates supermarkets in Singapore and are known for supplying affordable range of groceries and consumer goods.
Postal and Logistics
SingPost provides postal, logistics and retail services throughout Singapore and around the world. Its postal and logistics operations provide streams of stable cash flow for SingPost. This is vital in a contracting economy where companies with strong cash flows and balance sheets tend to survive tough economic conditions. However, its retail and e-commerce division could suffer due to lack of consumer spending.
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