Why The Stock Market is Offering a “Gift” Right Now

As of its close yesterday at 2873 points, the Straits Times Index (SGX: ^STI) has declined by some 19% from this year’s peak of 3,550 that was set in 16 April 2015.

Amidst the chaos, there have been some who have started comparing the mayhem in our stock market to what was experienced during the Global Financial Crisis of 2007-09. Back then, the Straits Times Index had fallen from a pre-crisis peak of 3,897 on 11 October 2007 to a low of 1,455 on 10 March 2009.

While the magnitude of the decline we’re currently looking at is not in any way comparable to what happened in the financial crisis, we may still see the stock market create a new “gift” for all investors.

The gift of the Global Financial Crisis

As I have shared in a previous article, tough times can create an extremely valuable by-product: Data on companies that can perform well even during tough times. It follows that if a company can sail through stormy seas in the past, then it would stand a nice chance of being able to navigate future troubled waters as well.

My Foolish colleague Chong Ser Jing has pointed out notable examples in the past, such as ARA Asset Management Limited (SGX: D1R). This could be one company to study further in view of its respectable business performance during the financial crisis.

Foolish Bottom Line

To find the most resilient companies in the Singapore stock market, you might want keep an eye out on a how company had done as the financial crisis was unfolding. It can make up one of the criteria in our investing checklist for each company we study.

Stock market declines may not be fun to be a part of, but if we look hard enough, we may find a “gift” instead.

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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 contributor Chin Hui Leong owns shares in ARA Asset Management.