Investors Please Smile… Because The Market Has Fallen!

Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI), has fallen by more than 16% since it reached a 52-week high of 3,550 points in April this year. Such a sharp decline is a hard thing for any investor to swallow.

But instead of feeling dejected, now could be a time to smile as the falling market may have caused some stocks to become potentially interesting long-term investing opportunities.

Earlier today, I had looked through a list of shares with market capitalistions of more than S$1 billion and which have fallen by more than 20% over the past six months. It’s a long list, and some of the shares which have been punched in the gut can be found in the table below:

Share price table for big losers

Source: S&P Capital IQ

Looking at the list, some of them have suffered a heavy blow as a result of macroeconomic worries like the slowdown in economic growth in China and the collapse in the price of oil. A company like casino operator Genting Singapore PLC (SGX: G13) can be said to have been a victim of the former. Meanwhile, local corporate giants like the rig builders Keppel Corporation Limited (SGX: BN4) and Sembcorp Marine Limited (SGX: S51) have been adversely affected by low oil prices.

Among the list above are another group of companies that have tanked partly due to negative research reports that have been released about them. This includes firms like Noble Group Limited (SGX: N21) and Silverlake Axis Ltd (SGX: 5CP).

So, which of the sucker-punched companies in the list are genuine bargains? If you would take some time to understand the reasons for their decline, then you can judge if the issues they’re facing are structural or cyclical ones; the former’s dangerous while the latter’s more benign though no less painful over the short-term.

If you can spot companies that are troubled mainly by temporary cyclical challenges, than those may be the bargains you are looking for.

That wraps it up for this article. For more (free!) investing tips and tricks and to keep up to date on the latest financial and stock market news, sign up now for a FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock SingaporeIt will teach you how you can grow your wealth in the years ahead.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim owns shares in Keppel Corporation and Jardine Cycle & Carriage.