Singapore Stock Market is uninspiring

I went away for a week and the Straits Times Index (STI) hardly moved. It was 3,177 points before I left the country and last Friday’s was 3,172. Comparing with the start of this year, the latest STI level was very close to it. (3,167 on 1 January 2013). Even Hang Seng Index did better than STI.

On Thursday, the Ministry of Trade and Industry raised the full year GDP growth forecast to 3.5% – 4.0% and this did not move our stock market. We are coming to the end of the third quarter reporting season and I see hardly any reason for Singapore stock market to rally, except to take the cues from the US fiscal and monetary situations. Euro zone economic problems and China flat economic growth are the other concerns.

The yield for US Treasury bonds of 10 years duration is now 2.752%. This yield is inching up and because of this the price of fixed income instruments is dropping. As investors, we are hit by double whammy, prices of fixed income investment and Singapore equity both go down hill.

We hear of ample of liquidity in the economy. Yet the banks are slowly offering better interest rates for fresh funds. 1.08% p.a. fixed deposit interest (UOB and OCBC). In the past, banks are not interested in taking in more deposits. Loans are cheap now compared to before 2008. My guess is that most of these loans are pumped into property purchase and car purchase. Stock investment would be further from their minds when they have huge loans to service.

It appears that there would be life in the Singapore stock market only when overseas funds see Singapore attractive again and the loose monetary policies of most developed nations continue.

In the meantime, have an equity portfolio that can offer you decent dividend returns and not to hope for capital appreciation that would be significant.

Copyright © 2013, 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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