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Where Next For The Singapore Market?

StockMarketBoardAs a stock market commentator I am often asked to make predictions at the start of the year about where I think the market is likely to be by the end of the year. I tend to treat the exercise as a bit of harmless fun because in my view no one really has any idea where markets are likely to be tomorrow let alone where they will be in 12 months’ time.

Consider what has happened to Singapore shares since the start of the year. Who would have guessed that the Straits Times Index (SGX:^STI) would have put 3.6% in the first 30 days of 2013? If you had asked most people at the end of last year they would have balked at the idea of buying shares given the continuing financial crises in the US and Europe.

But they would be wrong.

The STI started the year at 3,167 points and by the close of business on 31 January it stood at 3,282 points. The gains were driven by Wilmar International (SGX:F34), which put on 14%; SIA Engineering (SGX:S59), which gained 13% and Hong Kong Land (SGX:H78), which rose 12%.

So now that we have witnessed a good start to 2013, what is the outlook for the stock market from here?

I suspect most investors would not be too surprised if Singapore shares paused for breath. After all, nothing ever goes up in a straight line. That said we should perhaps bear in mind that many investors who had previously invested in bonds are now abandoning fixed-income securities and piling into shares instead.

I have even heard some people refer to the switch as the ‘Great Rotation’, as many investors are rotating from one asset class to another, because they believe they can achieve better returns by doing so. Such a move could provide the impetus that drives stock market growth over the years ahead.

As a stock market investor myself, I am obviously delighted that investors are finding their way back into shares again. Here at The Motley Fool, we believe that the stock market is the best long-term home for your money. And we have held that view consistently in both up and down market.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your FREE subscription to Take Stock — Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock — Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead. 

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.