In my 23 April blog post, I mentioned that the Straits Times Index (STI) was at 3,284 points, which was below 3,300 level. Since the start of 2013 to 23 April, the STI only broke 3,300 points level on eleven days.
Since 23 April, STI was above 3,300 points, touching a 52-week high on 22 May at 3,454.
It took a month for STI to climb up to highest level (3,454). But, it took just two days to bring STI down to 3,328 (30 May, 3.47pm). Yesterday saw STI declined 1.13% and now the STI is down another 1.16%. Between the peak and today’s STI, it was down 3.6%.
The rally seen in May was driven by plenty liquidity and loose monetary policies of major central banks, namely Fed, BOJ, ECB. The fear driving down equity markets now is that Fed may tighten monetary policy a bit because of gradually improving US economy. Money may become expensive to borrow as a result and investment in shares may not be as attractive as before.
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