Monday, November 2, 2020

Will There Be Light At The End of The STI Tunnel?

As of 31st October 2020, the STI index had lost 24.9% year to date.

We are once again in the market cycle where fear and turbulent times are over-riding investors' sentiments towards the market. 

In fact, a Bloomberg news article reported last week that Singapore and Thailand are two of the worst-performing market in Asia with the two markets down 24.95% and 24.96% respectively. 

Singapore, being an open export-oriented economy, struggled to find its feet under the radar after a soft reopening in the economy fails to spur up buoyant in the market.

For the older investors that have been around in the market for a while, this isn't something new that they've encountered in the market.

Let's take a look back at how STI performed in past global recessions and how it managed to bounce back.

STI Market Performance (1987 - 2020):

Singapore is a mature open state with a focus on productivity in manufacturing and an export-oriented economy.

It is not the first time that the STI has to face the bear market and adapt to new challenges, as with evidence in the past few years it has managed to always bounce back stronger from past crises.

From 1987 to 2020, the STI has entered bear market territory a total of 10 times, which brings on average a period of downturn once every 3.3 years. It didn't really tell much of a story though because a bear market is simply defined as a fall of more than 20% from the previous peak, which technically means you can play around within that 20% range in a nutshell but harder to predict a larger range.

STI (1987 - 2005)

STI (2003 - 2020)

For the past 33 years, the market has seen turbulence of varying lengths and severity.

I still recalled the days when the Asian Financial Crisis hits us because it was the year when my parents had to fly me over to Singapore and I had remained here ever since (events happened for a reason). 

I also recalled the days when schools had to shut for several days (jumping in joy back then) because of the severity of the SARS breakout and schools had to take caution.

There was also the tech bubble, 9/11, Great Financial Crisis, European Crisis, China bubble, etc.

And then there was the Covid-19 this year, which one day will become history to us.

There will be light at the end of the tunnel as past histories have shown that past growth returns will come on strongly on average the next 2 to 3 years after a bear market.

A Path to 3Fs (STI Compilation)

Conclusion

The STI market is clearly an unloved territory right now - judging from the fact that it is the worst-performing market in Asia and investors are shunning the local market as much as possible.

Investors often forget that bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria. 

Chances are today the STI market is tilted more towards pessimism and this is where I think we can find some good accumulation point for some of the stocks listed in the market.

While STI may disappoint many investors in performance this year, it might stage a strong rebound as the dog of the market may prove once again that investing in a market that is near the bottom is likely to yield greater rewards when the economy opens up again.

Thanks for reading.

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8 comments:

  1. haha. u forgot to factor in that SG is now led by this 4G team who doesn't have the guts to shut down SG early on and doesn't have the guts to fully open SG now from within.

    ReplyDelete
    Replies
    1. in short. This PAP team is not the same anymore.

      Delete
  2. There r 2 sides to a coin. Your point is intriguing...

    ReplyDelete
  3. uncle168,

    wow the covid mutate from minks to human in denmark since june

    i ran past a dog today it always bark every week but today it kept quiet

    i noticed it has mucus on its nose

    a few weeks back i saw another dog sneezing and the owner use tissue to wipe in siglap area where there was covid cases reported

    this covid virus is clearly man made by china using hiv and sars virus

    now it is spreading to animals and back to humans making vaccination impossible

    looks like we have to wear mask and work from home forever liao

    can throw away my passport going to expire in dec

    keekeekee

    ReplyDelete
  4. uncle168,

    when you have a situation when the rich gets richer and poor gets poorer any government will eventually topple

    it is the same everywhere

    the pap has been saying it help the poor since lky days but the reality is the rich gets richer and poor gets poorer

    the pap mps are rich why would they help the poor get richer?

    then they would become poorer as more tax on the rich would be imposed

    so its a gridlock situation when sg will end up like all democratic countries

    i saw a neighbour eating in the hawker centre wearing grabfood shirt, he used to drive grab now downgrade to deliver food

    he has children to feed and our mp hsk is nowhere to be seen in east coast grc after he nearly lost his seat

    the pap mps are rich the people are poor

    why would the rich help the poor?

    state capitalism is a road to nowhere

    that's why bhutan king didn't take the golden path like us

    all that glitter is not gold

    keekeekee

    ReplyDelete
  5. uncle168,

    your kids would grow up in a new world where wearing mask and working from home is normal

    the concept of offices and air travel would become alien to them

    negative interest rate would be the norm with bonds tenures exceeding a 100 years with at best 0% interest

    we live in a turning point in history where this man made virus would keep mutating until it wipe up the human race like how the ice age made the dinosaurs extinct

    that is why the gov build the free dino trail in changi to let us get used to the idea of becoming extinct

    keekeekee

    ReplyDelete
  6. uncle168,

    around chinese new year the covid 20 from denmark would spread rapidly around the world

    immigrants would then start to leave singapore as unemployment would be around 50%

    without tourism and rapid depletion of our reserves to put food on stinkies table mncs exit our market

    singapore has to return to manufacturing and agriculture to survive

    the service sector is dead without tourism

    the pap is still dreaming those crude economic growth days would return

    only cockroaches would survive after covid 35 wipe up the last of human beings in 2035

    keekeekee

    ReplyDelete
  7. uncle168,

    I would like the leader of the opposition to ask the government the finance minister whether GIC and Temasek did their due diligence using RMB3.5 Billion of taxpayers money to buy alibaba ant ipo which is now suspended

    ant ipo is china sub prime in the making as it sell its loan book multiple times

    luckily the ipo is suspended or our coffin money will be gone again :(

    keekeekee

    ReplyDelete

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