S’pore firms, households have sufficient buffers to weather financial shocks: MAS review

Singapore's firms and households are well-prepared to handle financial shocks, according to a review by the Monetary Authority of Singapore (MAS). The government body conducted stress tests as part of its annual financial stability assessment, evaluating the resilience of the country's financial system against global risks and domestic vulnerabilities.

Most household borrowers have adequate savings to avoid cash-flow problems, but highly leveraged firms or those with thinner liquidity buffers may face strain. Singapore's financial institutions, such as banks, have sufficient buffers to withstand stress. Despite higher global interest rates, firms and households showed resilience over the past year, buoyed by stable earnings and lower borrowing costs.

Foreign currency risk is contained, and corporate credit quality remains strong. A potential reassessment of AI-related asset valuations poses a key risk factor, as it could lead to a retrenchment in related investments and negatively impact revenue and earnings of exposed firms.