Singapore Stock Market
Singapore Stock Market trend in 2016 is predictably trending downward or continue to be flat. It could be the beginning of another great financial crisis after global financial crisis back in 2009.
What factors may cause our Singapore Stock Market to slide badly in 2016?
- Currency policy of various countries
- To gain competitiveness against US, China made a recent devaluation of Chinese RMB. This caused our SGX-STI index to drop nearly 10%, i.e. ~9.8% from 3153 (11 Aug 2015) to 2843 (24Aug 2015). Will there be another round of RMB devaluation in 2016?
- Such moves naturally would be followed by Australia, India, Korea to gain their competitiveness against China and the vicious cycle of currency war may begin.
- Euro Tug of War
- The impacts of BREXIT would be unavoidable in a long term perspective. It causes an uncertainty in global economy for the government of United Kingdom to steer out of the European union framework and build her own economy independently. The risk of both internal and external pressure will add on Ms Theresa May’s government and if her appointed foreign secretary, Mr Boris Johnson.
The EU Commission’s study predicts Greece’s debt to grow to 196 percent of gross domestic product (GDP) in 2015 and to 201% of GDP in 2016. The country’s current debt burden stands at around 320 billion euros, or 170% of national output.
- Can Germany and France have more bullets to save other EU countries if they ask for similar help like Greece? Even if both powerful countries grow their GDP in 2016, it is not sustainable for them to keep saving the poorer EU countries.
- Continued rising of US Federal Interest Rate
- As Singapore SOR and SIBOR is closely tied to US Federal Interest Rate. Once SOR and SIBOR rises, the borrowing cost will be getting higher. Reits Singapore may suffer a further hit with a higher than expected gearing ratio.
- Potential global Oil crisis
- Oil prices are keeping falling down. If it reaches a point of oil shock, it may likely to slow the growth and increase the inflation rate. Guess what? Stock investor gurus such as George Soros and Warren Buffett are also cutting their oil stocks. Recent winding up of Swiber which caused DBS an exposure loss of 721 million would certainly ring an alarm bell to Singapore investors.
I am not saying this Singapore Stock market crisis will definitely come in 2016-2017. But i feel rather “optimistic” about it by looking the things happening around us globally. I would like to take this opportunity to seek your views in a poll.
See the screened list of SGX Stocks based on industry and PE Ratio < 10 with dividends payout.