Will there be a Santa Claus Rally before this year comes to an end and the Straits Times Index (STI) stays above water compared to the beginning of this year?
The STI is currently at 3,052 points, below 3,167 at the start of the year.
Let me look at history of STI from years 1995 to current date. The table shows the beginning and ending values of STI over these years.
|
Year |
Beginning |
Ending |
Change |
Remarks |
|
2013 |
3167 |
?? |
?? |
Fed taper threat |
|
2012 |
2646 |
3167 |
19.7% |
|
|
2011 |
3190 |
2646 |
-17.1% |
Eurozone crisis |
|
2010 |
2897 |
3190 |
10.1% |
|
|
2009 |
1761 |
2897 |
64.5% |
|
|
2008 |
3482 |
1761 |
-49.4% |
Global financial crisis |
|
2007 |
2985 |
3482 |
16.6% |
|
|
2006 |
2347 |
2985 |
27.2% |
|
|
2005 |
2066 |
2347 |
13.6% |
|
|
2004 |
1764 |
2066 |
17.1% |
|
|
2003 |
1341 |
1764 |
31.5% |
|
|
2002 |
1623 |
1341 |
-17.4% |
|
|
2001 |
1926 |
1623 |
-15.7% |
Sep 11 attack on US |
|
2000 |
2479 |
1926 |
-22.3% |
Dot-com bubble burst |
|
1999 |
1392 |
2479 |
78.1% |
|
|
1998 |
1529 |
1392 |
-9.0% |
|
|
1997 |
2216 |
1529 |
-31.0% |
Asian Financial crisis |
|
1996 |
2266 |
2216 |
-2.2% |
|
|
1995 |
2239 |
2266 |
1.2% |
Of total 18 years tracked, 8 years out of 18 went into negative. Out of these 8 years, the reasons for some years were due to known crisis in that year. For most years, the STI rallied to end well above the level set at the beginning of that year.
So what about 2013? For one, economy of US is growing again. Japan and Europe are positive in their economic outlook. China is addressing their economic problems through structural reforms. Middle East is relatively stable politically. The big issue is the potential withdrawal of cheap money from US central bank (Fed). That can derail any upside to STI.
Then again who can gaze at the crystal ball and predict the outcome with certainty? Your guess is good as mine.
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.
