STI ended at 2,849 points before Chinese New Year

The Straits Times Index (STI) rose for a second day to end at 2,849 points today, which was the last trading day before the Chinese New Year break. Since the start of this year, STI had increased 7.6 per cent. This was a good start for this year.

Looking back at some historical data of STI (in chronological order):

Date STI Direction
1 Aug 2011 3,215
5 Aug 2011 2,994 Down
29 Sep 2011 2,708 Down
5 Oct 2011 2,528 Down
28 Oct 2011 2,905 Up
30 Dec 2011 2,646 Down
17 Jan 2012 2,815 Up
20 Jan 2012 2,849 Up

Since STI hitting a high at 3,215 points on 1 August 2011, we had not seen STI came close to it. STI continued to decline and touched a new low at 2,528 points on 5 October 2011. Since November, STI was hovering between 2,600 to 2,800 points.

How will the stock market move for the rest this year?

For starter, look at the Gross Domestic Product (GDP) forecasts of world economy and Singapore economy. The most recent forecast of the world economy was from the World Bank. It forecast the world economy to grow at just 2.5 per cent this year and 3.1 per cent next year. In the case of Singapore, GDP is forecast to grow between 1.0 to 3.0 per cent this year. These are weaker than the performances for last year. If this the case, one cannot see how STI can go beyond 3,200 points, which was the best of last year.

I am aware that it is foolhardy to predict the STI. STI can move for many other reasons besides GDP, such as confidence level of investors; capital flow from overseas to local market due to loose monetary policy of these countries; unexpected geopolitical crisis that may arise in other nations; natural disasters of countries.

Copyright © 2012, limkimtong for Living Investment

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

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