The Straits Times Index’s Quiet 2013

quiet baby sleep

We’ve just started the month of December three days ago. We have less than twenty more trading sessions to go before we can call 2013 a close. Over in the USA, stocks have done splendidly as major market indexes like the S&P 500 and the NASDAQ Index have both gained more than 25% in the year-to-date.

In Japan, Abenomics – Prime Minister Shinzo Abe’s stimulus plans to drive the country’s economy forward – has helped push the Nikkei 225 Index to gains of 51% since the start of the year.

The Australian stock market did fine too, though nowhere as fantastic as what the American and Japanese markets have achieved, as the S&P/ASX 200 Index has managed to log gains of 13.6% so far for the year.

So while some of the international markets around the world have done quite brilliantly, Singapore’s stock market investors can only look on with a slight tinge of envy as we see our Straits Times Index (SGX: ^STI) move up by a token 0.7% so far since the start of 2013.

Within the index, some of the biggest movers year-to-date would include the aptly-named alcoholic beverage manufacturer Thai Beverage (SGX: Y92), the bank DBS Group Holdings (SGX: D05), real estate developer City Developments (SGX: C09) and conglomerate Jardine Cycle & Carriage (SGX: C07).

The former two have gained 22.8% and 15.1% respectively. Meanwhile, the latter pair has had a somewhat unfortunate year as their shares have declined by 22.1% and 26%.

In short, it’s been a real mixed pot of results among the blue chips and the end product of all that is a flat year so far  for the STI .

That said, there is some positive that investors can take away from the year. Because the STI hasn’t moved much in 2013, it’s currently a fair bit cheaper than a number of its international brethren (save for Hong Kong) when using the price to earnings (PE) multiple as a yard stick.

Index (country) Year-to-Date Returns Trailing 12 months’ PE multiple
S&P 500 (USA) 26.3% 23.6
NASDAQ (USA) 34% 24.4
Nikkei 225 (Japan) 50.6% 15.5
S&P/ASX 200 (Australia) 13.6% 23.6
FTSE 100 (UK) 11.8% 17
Hang Seng Index (Hong Kong) 6.1% 9
STI (Singapore) 0.7% 12.5

Source: S&P Capital IQ; SPDR Straits Times Index ETF data

So, having a cheaper market is one advantage that our local shares have over the others. But, that’s not the only good thing we have going on for the STI right now for some investors.

Back in August, I shared how the index is on track to having its second least volatile year since at least 1988.

Despite all of the major political and economic drama we’ve witnessed in other parts of the world – remember the Cyprus banking crisis in the Eurozone in March; fears of a slowdown in Japan’s economic recovery; and the jitters that were felt when the US Federal Reserve hinted at a possible quenching of its fiscal stimulus programmes? – Singapore’s stock market has managed to remain really calm.

As of 12 August 2013, the STI has closed up or down by more than 1% for only 17 trading days.

I’ve since updated the data, and it turns out, we’re still on track for a really quiet 2013, with the index having only 25 volatile days as of yesterday. The quietest year in the period spanning 1988 to 2013 has so far been 2005, with 22 volatile days.

While it is definitely a nice feeling to not have to stomach large price declines on a regular basis, investors should also realise that how calm the markets are bears little relation to how well the markets will do.

But if lesser volatility can help some other investors sleep better at night, then perhaps that’s a good thing too.

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