Why STI is trapped in a 1,000 point range?
Singapore stock market best represented by STI has been trapped in a 1,000 point range since 2011. Why is this so? Following table shows the composition of the index, banks weighting at 36.8%, telecommunication at 7.9% and real estate is another substantial portion. These industries belong to the "old economy" and the "new economy" companies like the technology and e-commerce industry have little presence within the index.
Whereas bourses with a strong presence of technology and e-commerce in their weighting, they have been gaining traction and displayed a trendy market despite so many global uncertainties around.
Since "STI 1,000 point range" published on 9th April 2018, it continues to range whereas the US markets broke new high in October 2018.
Range market, it is good in today's context
When comes to investment, seeing more upside for capital gain, it may not be the only consideration, especially with so many uncertainties today. Savvy investor will also have to consider the potential downside risks. For example US markets, they are still trading near it's historical high today.
On this hypothesis between markets that are still trading around it's historical high and STI on "who has the greater risks?" On the next financial crisis, who is it?
Yes, Singapore market may a boring market to look at, but it has drawn interest in the recent month as a safe haven for investors to invest their money here because of stable dividends and a cushion downside risks.