The Straits Times Index (STI) stayed above 3,000 points level for most of 2007 since the start of that year. It touched a peak of 3,875 on 11 October 2007. After the USA declared it was in recession in December 2007, STI was 3,482 on 31 December 2007. STI then began the downward spiral for whole of 2008 touching the lowest point on 9 March this year at 1,456. Another significant date in 2008 was the collapse of Lehman Brothers Inc on 15 September 2008. The STI was at 2,486 on that date.
The STI staged a spectacular recovery since the low of 9 March to reach 2,329 on 29 May. This was a gain of 36.3 per cent for the five months of this year. This meant that the STI was catching up with the level last seen before the collapse of Lehman Brothers Inc.
The next major psychological level is 2,400 points. Will this too be broken with ease?
The world is still in recession including Singapore. Are major economies better now compared to middle of last year? We knew that the first quarter of this year saw the worst economic performance for most economies since last year. Will the STI continues on its upward trend? Can we expect a sustained rally? Is the STI supported by forward corporate earnings for this year?
I am not certain as to whether the recent STI rally can be sustained.
Written on 5/30/2009 9:34 PM
Copyright © 2009, the author known as LKT in Singapore.
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