STI Correction – Long Time Coming

For those of us who have been actively reallocating our capital back from stocks to cash, you should be positioned well for the coming weeks as there will be obvious discounts in the Singapore Market due to the latest shock sent via additional harsh restrictions. Anyway, Singapore’s correction is in line with its recent rallies and the fairly well-known “Sell in March, Buy in May” practice. From my point of view, the market is less affected by the news compared to 2020 because many businesses have adapted to the impacts of the pandemic in one way or another. Additionally, this shock came with multiple warnings after new clusters started forming in Singapore. If anything, I would think that this temporary “CB-Like” event is beneficial for business restructuring and of course for our citizen’s health.

STI – Updated Daily Chart

STI has crossed both support lines marked out in expectation of the correction. Like I mentioned multiple times, the market is just waiting for the trigger for a correction to happen. Looking at how it happened so rapidly yesterday, I am sure many investors are still somewhat optimistic although if institutions continue to toss back more stocks back into the market, we can expect further price dips even for sectors which are less affected by the new measures in place.

STI – Updated Weekly Chart

When we look at the weekly chart, you will notice that the market is recovery has been quite calm even during periods of higher optimism. Stocks covering aviation, hotels and hospitality are on the hot buy lists now as many investors will take the opportunity to buy back what they have sold when the stocks went up too much in February and March.

Author’s Call as of 15th May 2021

• STI’s correction finally arrived and investors who have taken action in expectation of it benefitted immensely
• Clusters formed in multiple part of Singapore however with more citizens vaccinated, the health impacts are less devastating
• Business are better equipped to operate as they have gone through varying stages of restructuring and digitalization
• Investors should look at sectors which were overheated in the past months and decide on potential entries for a significant discount

Author’s Call as of 8th May2021

• STI’s movements have been great in the past week if you have taken profit prior to the sudden price corrections
• As the TTSH cluster continue to manifest, STI’s performance might be tugged by new Government restrictions to curb the spread
• Otherwise many companies on the STI are still underpriced since the impact of the pandemic is still present
• Some turbulence to be expected in the near term especially for hard-hit sectors